Financials Weekly Notes: Citigroup, Credit Suisse & RBS

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Global markets continued to remain in a state of flux over the week, as investors tracked developments in the Eurozone closely. Investors started the week on a positive note with the hope that a capital infusion in the Spanish banking system will help ease the growing economic tension in the country. This helped bank stocks continue the recovery trend they began late last week into Monday. But towards the middle of the week, sentiment took a hit with yields on Spanish & Italian government notes rising sharply. Investors turned to safer options like U.S. Treasury notes, and bank shares plunged toward the end of the week. An unexpected decline in pending U.S. home sales figures for the month of April raised concerns about the recovery in the country’s housing market and lower than expected nonfarm payroll data added to concerns that the US economy is slowing.

Citigroup (NYSE:C), Credit Suisse (NYSE:CS) and RBS (NYSE:RBS) witnessed some significant events over the week.

Citigroup

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Citigroup reduced its stake in the Turkish Akbank from 20% to just under 10% earlier this week. The global financial giant has accelerated its non-core assets sale in the recent past after it failed the Fed’s stress tests this March – starting with its complete stake sell-off in the Shanghai Pudong Development Bank that month. The Akbank stake sale made Citigroup richer by $1.15 billion, although the bank will recognize a pre-tax loss of $243 million from the sale.

Details about Citi’s Akbank stake sale can be found in our article Citigroup Sheds Half Of Turkish Akbank As Asset Sales Continue.

See our full analysis for Citigroup

Credit Suisse

Trouble seems to be brewing at Credit Suisse, as the second largest Swiss bank is forced to contend with a series of high profile employees putting down their papers. This does not help the bank’s focus on turning around its business which came under considerable fire earlier this year for the poor performance compared to its peers. The company has had to let go of its chief information officer Karl Landert, its global mergers & acquisitions head Boon Sim and its alternative asset management chief Ravi Singh within a short span of time. Three of its veteran brokers – each with nearly 30 years of experience – have also decided to call it quits.

Read more about the string of high-level exits at Credit Suisse and its impact on the bank in our article Top-Level Exits At Credit Suisse Is Bad News.

See our full analysis for Credit Suisse

RBS

RBS is stepping up plans to divest its insurance arm, with the U.K.-based bank adding UBS (NYSE:UBS) to the list of investment banks that will oversee the spin-off of the Direct Line group. The 82% state-owned banking group hired Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) earlier to act as joint bookrunners for the listing.The insurance business is valued at around £4 billion ($6.4 billion).

More information about this can be found in our article, RBS Fair Value $8.70: Readies For Insurance Arm Spin-Off.

See our full analysis for RBS

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