Friday, March 6, 2009

But we're not sure why they're offering such a big premium (via Dealbreaker)

From Clusterstock:

Someone Made An Offer For Citi (C)

But we're not sure why they're offering such a big premium (via Dealbreaker)

C Mar 6 2009, 11:43 AM EST
1.02 Change % Change
- 0.00%


Don the libertarian Democrat (URL) said:
Actually, here's Reuters today:

"TOKYO (Reuters) - Citigroup plans to sell its 26 percent stake in Japanese online broker Monex Group Inc as part of the struggling U.S. bank's efforts to raise cash, the Yomiuri newspaper reported on Friday.

Shares in Monex, Japan's second-largest online brokerage in terms of customer accounts, fell 8 percent on the report, cutting the value of Citigroup's stake to 14.1 billion yen ($144 million).

Citigroup, which has received $45 billion of U.S. taxpayer funded capital injections since October, appears to have already sounded out several financial institutions on the Monex stake, the Yomiuri reported.

Yoshito Shimoyama, a spokesman at Nikko Citi Holdings Inc, Citigroup's holding company in Japan, declined to comment.

Citigroup is also trying to sell Nikko Cordial, a bricks-and-mortar retail broker with 109 branches across Japan.

Japan's top three banks -- Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group Inc -- have shown an interest in buying Nikko Cordial, sources have told Reuters.

The three banks may also jump at the chance to buy a stake in Monex, but would likely make it a first step toward seeking majority control, said Azuma Ohno, a brokerage industry analyst at Credit Suisse Securities.

Mitsubishi UFJ owns a 51 percent stake in Securities Co, the fifth-largest among Japan's six major online brokers.

"If it thinks Monex is cheap, it might be interested in buying to expand its current operations," Ohno said.

Neither Sumitomo Mitsui nor Mizuho have an online brokerage unit, and buying a stake in Monex would allow them to make a full-fledged entry into the market.

But the potential sale of the Monex stake comes as Japan's online brokers struggle to maintain profitability with the benchmark Nikkei average hovering near a 26-year low."

You have here the same problem as with Toxic Assets; namely, there's a huge discrepancy between bid and ask. Essentially, we've been providing bridge loans for the bailouts. The problem is that many of these assets might not make it, or be worth nothing going forward. It's a huge risk, which the government is not acknowledging when it talks about the current risks.

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