If you are interested to see how the credit crisis is affecting the world, check out Reuter's map on Global Financial Crisis.
On Monday, Wall Street put aside its worries, at least for a day. Citigroup’s share price, which had plunged to a mere $3.77 on Friday, shot up to $5.95. Shares of its biggest rivals — banks which, with the government’s help, are emerging to dominate the industry — also soared. Bank of America jumped 27 percent, JPMorgan Chase leapt 21 percent and Wells Fargo gained nearly 20 percent.
In the short term, the latest effort(a multi-million dollar backstop) to steady Citigroup has removed the risk that a sudden failure of the giant bank would send losses cascading through the financial industry.
But longer term, the new bailout could haunt regulators and taxpayers. The move ultimately may encourage banks to take more risks in the belief that the government will step in if they run into trouble.
Below is a message delivered by Jonathan Larson, CEO of CitiBank Singapore Ltd.
November 24, 2008
To: Customers of Citibank Singapore Limited
Dear Customer,
In light of the recent and unprecedented volatility in the world's financial markets, I am writing to update you on Citi's continuing financial strength and our commitment to serve all of your financial needs.
Much has happened during the last year as the global financial crisis has unfolded. At Citi, we took decisive and early action to prepare ourselves to weather these tough times through significantly strengthening our capital and liquidity positions. Governments around the world have also responded to the financial crisis by providing explicit support to the banking systems. So you should rest assured that your deposits are safe with us.
To: Customers of Citibank Singapore Limited
Dear Customer,
In light of the recent and unprecedented volatility in the world's financial markets, I am writing to update you on Citi's continuing financial strength and our commitment to serve all of your financial needs.
Much has happened during the last year as the global financial crisis has unfolded. At Citi, we took decisive and early action to prepare ourselves to weather these tough times through significantly strengthening our capital and liquidity positions. Governments around the world have also responded to the financial crisis by providing explicit support to the banking systems. So you should rest assured that your deposits are safe with us.
- Deposit Guarantee: In Singapore, the Government has announced that individual and corporate customers of licensed banks, including Citibank Singapore Limited and Citibank NA, Singapore branch, will enjoy protection of the full amount of their eligible deposits.
- Our Capital: At Citi, while we have taken significant asset write-downs, we have also increased our capital by US$85 billion. Taking this into account, Citi's Tier 1 pro forma capital adequacy ratio is approximately 10.4%, which not only exceeds regulatory requirements but also makes us one of the most well capitalized banks in the world.
Citibank Singapore Limited is regulated by the Monetary Authority of Singapore and, as such, is subject to all prudential and other requirements applicable to banks in Singapore. The locally-incorporated Citibank Singapore Limited maintains S$1.5 billion in paid-up capital and over S$3.2 billion in shareholders' funds at the end of the second quarter. Its Tier 1 capital ratio is 15%, which is far in excess of the minimum requirement as prescribed by the Monetary Authority of Singapore.
- Our Liquidity: Citi has a unique and diversified universal bank model with over 200 million customer accounts in over 100 countries, which gives us strong and stable operating income, US$780 billion in deposits, unparalleled access to funding, and, as a result, extraordinary levels of liquidity. In addition, like other banks in the United States, we have access to lines of liquidity through the U.S. Federal Reserve.
- Our Balance Sheet and Ratings: Citi's balance sheet is in excess of US$2 trillion, and our credit rating is among the highest in the world for a financial institution or otherwise.
As for recent movements in Citi's stock price, the safety of your deposits with any bank is not dependent on its stock price. Rather, a bank's ability to meet its obligations is dependent on having strong capital and liquidity. We have carefully reviewed our potential exposures under a wide variety of stress scenarios and are highly confident that between our capital, liquidity and continuing strong operating cash flows, we will maintain our financial strength through these difficult times.
Citi has an almost 200 year history of leadership throughout the world, and we have been serving customers in Asia for over 100 years. We look forward to serving you in the years to come.
Driving your success is what drives us. That's why Citi never sleeps.
Citi has an almost 200 year history of leadership throughout the world, and we have been serving customers in Asia for over 100 years. We look forward to serving you in the years to come.
Driving your success is what drives us. That's why Citi never sleeps.
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