Citibank, a bank of international repute is well on the path of saving itself with government aid that too in the global superpower United States has raised a lot of eyebrows. A question mark put against Citibank’s functioning and capabilities is very much in order.
If things get underway as wished by Citibank you have government converting almost $45 billion of preferred shares owned by it last year. A stake struggle is clearly visible as the US Government want to acquire a 40% stake while the Citibank would prefer to rest it at 25% and last but not the least the value of the preferred stake is actually a mere 8%.
The financial onslaught, the magnitude and the pace of which it is affecting the global economy and super powers has got everybody fumbling for putting a brake at the situation. Be it the economists, financial analysts, market researchers, bankers of repute and experience – each one of them is at a loss as to how to go about it in reality.
Talk about the vast volumes on economics and market behavior which have been published in the past are seeming to be mere guidelines with not concrete sign visible this time and again proves the fact of unpredictability of human behavior pattern.
The uncertainties are gross and the fear factor huge. What has been maximized is the government intervention and bailout money which seemingly provides the banks with a breather for a short period of time.
Meanwhile as US President Obama puts forth his fiscal budget, support for the automobile companies and other fiscal measures to put up a saving face for Big B, we have most of the economies of the European Union and Asia feeling the heat and severe crunch. Against these happenings, we have gold being most appreciated in the global as well as domestic front reaching unattainable heights.
The Citibank stake struggle could finally change a lot of equations of banking system and government bailouts too. There is all the more change of increasing government control over banks which is likely to hinder free flow of money in the market and not appreciated by most of the financial experts and economists.
Whether Citibank is nationalized or not, the outcome will obviously come through in the near future. But the bankers and so called financial experts need to rework their policies and try to work on the safer ways to earn returns rather than venturing into other avenues to earn returns.
