\ufeffTopic; Citibank<\/p>\n
Name <\/p>\n
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Instructor<\/p>\n
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Introduction<\/p>\n
A fundamental issue in macroeconomics is the consideration of whether or not the markets, if left alone can routinely bring about a long run economic equilibrium. If the market operation was done freely and in due course resulted in a total employment level of national income with firm economic growth and prices, then there would be no need to call for government intervention in the macro economy- no use of supply side policies and fiscal monetary exchange rates. The fact is that every government intervenes by use of their macroeconomic policies in a bid to attain specific policy objectives as well as improving the entire performance of the economy (Warsh 2006, pg 35). <\/p>\n
A good climate for operating a business is the first factor every business person or group is looking for, this climate is vital to private companies led growth, development and investment, which in turn is very crucial for income growth, generating employment and poverty reduction (Warsh 2006, pg 39). Successful policies to advance the investment climate calls for development of sound facts based on the constraints and problems to private company\u2019s investment. With the rise of macroeconomic policies, more business opportunities are coming up in different parts of the world and the results are encouraging (Warsh 2006, pg 41). These policies have provided a good climate for business transaction in Citibank and there is now a universal consensus that a good climate is very crucial for most private companies\u2019 led economic growth. Researchers have noted that a good climate for doing business provides incentives and opportunities for companies from micro enterprise to global enterprise to create job opportunity and invest productively. Due to the good climate created by macroeconomic policies in a number of businesses, it has been noted that the investment climate molds the risks and costs of doing business, including the hindrances to competition, all of which highly influence the impact and task of the private companies\u2019 in economic and social development, poverty reduction and economic growth (Warsh 2006, pg 44). A good business climate has been perceived as a key issue in international policy debates on promoting the private companies\u2019 development.<\/p>\n
Studies have shown that, in order to improve the business climate a firm can streamline the multitude regulations and rules that make life difficult for businesses of which drives the business people into the informal sector. Citibank is an example of a company that has applied the act of rules and regulations, these kinds of rules govern the registration of upcoming businesses and the capability of the companies to hire more employees and get credit, transact and enforce contracts and reinvest. The macroeconomic policies play a major role in every company for example the federal monetary policy, whereby a loose fiscal policy drives the interest rates down creating an opportune time for consideration of funds borrowing (Knoop 2004, p. 41). However macroeconomic policies can affect any business organization in a positive or negative way.<\/p>\n
Financial statues of Citibank<\/p>\n
The Citibank is among the top list in syndicated loans with over two billion dollars reported in the past one year. However Citibank was once bailed out with five hundred and ninety million investment dollars and it was nearly ruined by the savings and loan crisis, following real estate fall down that forced the United States into a serious recession (Walter 1996, pg 30). Currently some investment firms believe that more billion dollars will be needed by Citibank so as to save this global financial giant. As every investor across the globe wants to save Citibank, there will come a time that majority of this investors will turn towards this bank in a different way where they will be throwing good money after bad in a fruitless effort to save it. Most clients are not ready to buy the Citibank\u2019s stock while for others it\u2019s a game of risking. Although the reporters were not saying the business was about to go down due to its depreciating financial rates, it was very clear that, this world wide financial giant was affected badly due to the bad loans in the United States real estate sector. <\/p>\n
These are the latest report available of Citibank Quarterly report as from December 2005 to December 2007. (Table by Turk 2008)<\/p>\n
\u00a0 31-Dec-05 31-Mar-06 30-Jun-06 30-Sep-06 31-Dec-06 31-Mar-06 30-Jun-07 30-Sep-07 31-Dec-07 <\/p>\n
Total Liabilities 1,381,500 1,471,783 1,511,123 1,628,383 1,764,535 1,898,883 2,093,112 2,231,153 2,069,108 <\/p>\n
Stockholder Equity 112,537 114,418 115,428 117,865 119,783 122,083 127,754 127,113 113,598 <\/p>\n
Stated Leverage 12.3 12.9 13.1 13.8 14.7 15.6 16.4 17.6 18.2 <\/p>\n
% Equity\/Liabilities 8.1% 7.8% 7.6% 7.2% 6.8% 6.4% 6.1% 5.7% 5.5% <\/p>\n
\u00a0 Intangible Assets 47,879 48,025 48,760 48,894 49,316 53,710 62,206 63,600 63,891 <\/p>\n
Tangible Assets 1,446,158 1,538,176 1,577,791 1,697,354 1,835,002 1,967,256 2,158,660 2,294,666 2,118,815 <\/p>\n
Tangible Equity 64,658 66,393 66,668 68,971 70,467 68,373 65,548 63,513 49,707 <\/p>\n
Real Leverage 21.4 22.2 22.7 23.6 25.0 27.8 31.9 35.1 41.6 <\/p>\n
T-Equity\/T-Assets 4.5% 4.3% 4.2% 4.1% 3.8% 3.5% 3.0% 2.8% 2.3% <\/p>\n
\u00a0 <\/p>\n
Nevertheless the Citibank is trying to appreciate its financial transaction rates and from the table above, it\u2019s very clear that, from year 2005 to current Citi\u2019s leverage has appreciated in each quarter from 12.3-18.2 times (Turk 2008, no page). This indicates that the equity as a percentage of the liabilities has depreciated during this season from 8.1 percent to 5.5 percent. The infrequently traded assets, which stood at twenty eight billion dollars, were valued on the basis of the company\u2019s own estimates. Studies have shown that the Citibank may end up making losses on the CDOs (Turk 2008, no page). It took more than twenty billion dollars in credit associated losses in the last years and the conditions are getting worse given that the United States is in a recession. It is still not easy to comprehend how a bank as large and old as Citibank allowed itself to get swallowed into the sub prime leading markets in such a huge way. The Citibank was the only bank that understood the basic rules and regulation of leading; this was brought about by their years of banking expertise and billions of dollars of cash treasury (Walter 1996, pg 35). Currently the Citibank future is left up to Arab billionaires and eventually the United States federal government with the threat of its economy excepted to remain in recession up to the end of year twenty ten. The city group corporation has currently an approximation of three hundred and six billion dollars in risky assets which are the major issues the bank is working on, however, in spite of this negative report the Citibank is working very hard to stabilize itself once again in this economy. There is still hope for Citibank with the help of the government who are currently investing billions of money. <\/p>\n
References<\/p>\n
Knopp, T. Recessions and Depressions: Understanding Business Cycles. London. University Press, 2004.<\/p>\n
Warsh, D. Knowledge and the Wealth of the Nation. London. Norton publishers, 2006.<\/p>\n
Walter, Wriston. Citibank, and the Rise and Fall of American Financial Supremacy. New York. Crown Publishers, 1996. <\/p>\n
Turk, J., (2008). The Markets Oracles. Retrieved on 23 November 2010, Available at; HYPERLINK “http:\/\/www.marketoracle.co.uk\/Article4088.html” http:\/\/www.marketoracle.co.uk\/Article4088.html<\/p>\n","protected":false},"excerpt":{"rendered":"
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