I have two Primary Issues…and several related ones….. with this SKS Microfinance Primary Issue

• Microfinance Industry emerged to alleviate Poverty by providing access of basic financial services like Loans and microinsurance to the poor…..I am frowning at this attempt to commercialise this Industry through an IPO at such a High Premium
• I am not going to contribute to the Profits of Pre IPO Shareholders…especially Sequoia Capital…. who are offering for Sale their Shares in this SKS Microfinance IPO that has opened today !

  16.79 Million Shares are on offer in the price band Rs 850 to Rs 985 !….of which only 7.45 million shares are Fresh Issue with IPO proceeds going to the Company while 9.34 Million Shares are Offer for Sale by Existing Investors…In fact Sequoia Capital,termed as a Promoter, is offloading 3.99 million shares in this IPO of their 9.1 million shares and will bring down their holding from 14.1 % Pre IPO Equity of Rs 64.52 crs to 7.1 % of Post IPO Equity of Rs 71.97 crs….Their average acquisition cost is Rs 61.18 only and they have been allotted shares in 2007 and 2008 in three tranches at Rs 49.77,Rs 70.67 and Rs 103.91….Just Imagine….Sequoia paid just under Rs 56 crs for their 9.1 million shares….If Rs 985 Top end Price is fixed for this IPO,the 3.99 million shares they are offering on sale will fetch them Rs 393 crs !…so they make a whopping near Rs 337 crs over their aggregate cost  for shares held for just  two to three years and yet have 5.1 million shares remaining with them !…reminds me of a similar ploy by Citigroup and Chrys Capital in the Suzlon issue a few years ago ! (Search my blog for this)                                                                                                                   There is something not right in Promoters enriching themselves handsomely by part cashing out in the IPO or pre IPO….In fact the Chief Promoter,Vikram Akula sold 9.45 lakh of his Shares just this year in February 2010 to Tree Line Asia Master Fund (Singapore) for US $ 12.92 million (works out to @ Rs 637)…In fact several top Employees also sold part of their Esop shareholdings to Tree Line for Rs 636.72….Encashing Profits of Crores like this just before the IPO brings into question Promoter and Top Management Committment to the Company….Maybe Legal…but….Feels like they are itching to exit at Rs 985 as they may not get this price again!….and inside a year Shareholders have been allotted Shares even at Rs 300….from here to the Gains are over 200%….Even after the IPO,the Pre IPO Shareholders will hold nearly 77% of the Post IPO Equity….This would entitle them to 77% of the Networth….which would have been substantially built by the Public who are paying Rs 985 per share in the IPO !…Nah !…now why would the Public do this ! ?…they are merely looking at one side of the Equation that they will benefit from the Share Price above Rs 985….they fail to see that their Rs 985 is creating Huge Assets of which they will merely own 23%…..while 77% will be owned by Pre IPO Shareholders who have contributed in the past one to three years just an average acquisition price of  Rs 24.54 to Rs 137.53 (Promoters) and upto just Rs 300 for Non Promoters     

While contending with my emotions on the above two issues, the High,near obscene IPO Price Band of Rs 850 to Rs 985 makes it easier for me to say ‘No’ to this Issue

One pays such high Premiums for a Rs 10 Face Value Share only if excited on massive non linear growth in Profits coming up in the near future and significant scalability of Operations…..but when over half of the Shares on Offer are actually Offer for Sale by existing Shareholders,one needs to be on alert and say “Hey ! Hold On ! Let’s have a better look at this !”

At Top end Rs 985 the IPO Size is Rs 1650 + crs of which only Rs 734 crs will go to the Company…..Market Cap will cross Rs 7200 crs if listing is around these levels

In my humble Opinion,Rs 850 to Rs 985 is simply too high a Price to pay right now for SKS Microfinance,despite the scalability potential…have a look at the past five years selected financials

 Now the Post IPO Equity will be Rs 71.97 crs and at Rs 985 Top end the Net IPO Proceeds that will accrue to the Company will be Rs 734 crs…thus Networth will move from Rs 950 crs at March 31,2010 to Rs 1730  + crs post IPO assuming Q1 Profits of Rs 50 crs…that’s a Book Value of Rs 240….this is a 4 Book Multiple of Top End Price of Rs 985

What SKS Microfinance is attempting to do with such a High Premium IPO is what Reliance Power and even Future Capital Holdings did in the past in 2008 !…Create High Networth through Obscene Premiums and Minimum Equity Dilution ….and both are quoted horribly below IPO Pricing….In fact Biyani’s Future Capital Holdings came at Rs 765 in January 2008…It’s Rs 247 today !…. 

However SKS Microfinance may not quote horribly below IPO Pricing because of scalability potential….in fact Rs 50 is the grey market Premium currently….Optimists can look at it this way…At March 31,2010 it showed  a Networth of Rs 950 crs and a PAT of Rs 175 crs…At March 31,2011 it will surely show a Networth of near Rs 2000 crs and a possible PAT of Rs 250 crs….that’s yet a high 28 multiple on a Possible FY 11 EPS of Rs 35 at Rs 985 IPO Price…now if it’s a straight double networth and double profits that means a PAT of Rs 350 crs,an EPS of Rs 49 and a Earnings Multiple of 20 !

I’m not recommending this Issue…but if you want to contribute to the Profits of Sequoia…be my guest !

An ABBA songs comes to my mind ” Money ! Money ! Money !…it’s a Rich Man’s World !”

Intentions of Promoters and Pre IPO Shareholders may be Noble….but Actions are clearly Profit Motivated and not singularly Selfless

Cheers !

I’m Looking Beyond the Financials here…..at the Standard Chartered Bank (SCB) INDIAN DEPOSITORY RECEIPTS (IDRs) Issue….am not inclined to recommend Investment,although the Pricing looks reasonable and it will not form part of the Overseas Investment Annual Limit of US $ 200k per Indian Citizen….probably a contrarion here as all seem to be recommending the IDR….I’m a bit worried about the Exchange Rate Risk involved…in that the Rupee may appreciate and as the underlying SCB Share is quoted in Pence and HK $ it would impact the Rupee Quote on BSE and NSE….Is my thinking conceptually flawed on this risk ?…do let me know 

I’ll let the IDR List and take a call on it as a Secondary Market Investment

Standard Chartered Bank,that is the sponsor of the Mumbai Marathon since it’s inception a few years ago,has just launched INDIAN DEPOSITORY RECEIPTS (IDRs) in India

The IDR Issue Specifics

The IDRs have been priced in the range of Rs 100 to Rs 115 with 10 IDRs equivalent to one SCB Share of US $ 0.50 Face Value…240 Million IDRs are on offer,with QIB reservation at 50%,Non Institutional at 20% and Retail at 30%…The Issue Opened on May 25,2010 and shall close on May 28,2010

Issue Price Range is at Relatively Reasonable Valuations on both Earnings and Assets basis 

Assets Basis

At December 31,2009,SCB had a Consolidated Networth ,net of Minority Interests of US $ 27340 Million,with Equity at US $ 1013 Million ( FV US $ 0.50) and Reserves at US $ 26327 million…That’s US $ 13.50/share or Rs 635/share (US $=Rs 47)….With 10 IDRs=One Share,it translates to Issue Price of Rs 1050/share,assuming the Pricing is finalised at Rs 105….That’s a Price to BV of just 1.65….The Networth should move towards US  $ 31000 million at December 31,2010 with Profits net of dividend of @ US $ 3000 million and IDR Proceeds of @ US $ 536 million (assuming Rs 105 pricing and Exchange rate of Rs 47 to the Dollar)…Equity will move up marginally to US $ 1025 million.The Book Value/Share would be @ US $ 15/share or Rs 705…The FY 10 P/BV would then drop to 1.5….   This is a shade lower than even the 1.6 projected for FY 11 March ending for  ICICI Bank and State Bank of India…and significantly lower than the over 2 times projected for Axis bank,HDFC Bank and Yes Bank…It’s more on less equal to that projected for overseas Banks like Westpac and National Australian Bank in Australia and even those in Hong Kong ….so the IDR is not priced  high on Assets basis

Earnings Basis

in 2009 SCB earned a consolidated US $ 3892 million  net of minority interest…That translates to Rs 18300 crs and an EPS of US $ 1.92 or Rs 90 based on 2025 million shares at December 31,2009…No of Shares will go up to 2049 million and Projected EPS would be US $ 2.10 or Rs 99…that’s a muiltiple of under 11 times at computed Share Price of Rs 1050,assuming IDR Price assumed Issue Price of Rs 105….This compares well with the higher earnings multiples afforded to the Banks named above

A word of caution…..

• As the IDR is not covered by the Securities Act ,Securities Transactions Tax will not be applicable on Trades….thus one  will not get the benefit of nil tax on Long term gains and lower tax rate on short term gains…Gains will be added to total taxable income and taxed on the applicable…for high earners the rate would cross 30% ….in any case the New Direct Taxes Code that is scheduled to be implemented from next year will provide a level playing field as it does away with STT and also any distinction between short term and long term gains….though there is hope that the Code is modified to revert to existing scenarios  
• As FIIs and Insurance Funds are not allowed to participate in the IDRs,the shareholder base would be missing these two significant categories…therefore interest even on listing could be muted
• There is no reverse fungibility…after a one year lock in, 10 IDRs can be converted to One SCB Share…but such a share can be held for a maximum of 30 days only and must be sold off and cannot be reconverted back to IDRs  
• As the IDR’s underlying is the SCB share,the Rupee quotes on BSE and NSE will reflect the quotes on London Stock Exchange which are in Pence and those on Hong Kong Stock Exchange which are in HK $…therefore Changes in Exchange Rates between the Pound and the HK $ on one side and the Rupee on the other will also impact the Rupee Quotes….and to make this even more complicated,the Face Value of the SCB Ordinary Share is designated in US $ at US $ 0.50 per share….With pan Asia Operations SCB took a US $ 2.8 Billion hit on FX Translations in 2008 and less in 2009…have a Look at the Exchange rate Impact on Indian Quotes….I’m not even considering the impact of Earnings and Multiples  

Ostensilbly under great pressure to vacate the banking field,the Tayals of Bank of Rajasthan are having their Cake at eating it too!

The Board of Directors of the Bank at their meeting yesterday have given an in-principle approval to amalgamate the Bank with ICICI Bank

The important issue here was what would the swap ratio be….Mrs Chanda Kochar,MD of ICICI Bank announced yesterday that,subject to due diligence,the swap ratio would be 25:118….for every 118 shares of BOR,the shareholder would get 25 Shares of ICICI Bank

Reacting to this,from morning BOR is 20% up on upper circuit at Rs 119.40,while ICICI Bank has dipped to Rs 855 from Rs 890 levels….if ICICI Bank remains at these levels,the BOR Price has to move past Rs 180 to reflect this swap ratio….that’s another 50% up

Tayal,who were always under some cloud or the other will benefit immensely

They had declared they held 28.60 % of the BOR Equity of Rs 161.35 crs (FV Rs 10)…However SEBI under an ex parte order of March 8,2010 have declared that Tayals have a 55.01% stake in the Bank

P K Tayal,claimed on TV yesterday that they were not selling any stake and it was only a 100% swap….however,what will prevent them from selling their stake in ICICI Bank on the swap….Considering their declaration that they hold 28.60%,it amounts to holding 4.61 cr shares of BOR…this would give them 97.67 lakh shares of ICICI Bank…At The price of Rs 855 now,this stake has a value of Rs 835 crs !

And if you take SEBI declaration as correct,Tayals hold 55.01 % in BOR…This means 8.88 crs shares which would be swapped for 1.88 crs shares of ICICI Bank….current value of this is over Rs 1600 crs!   

View this Bonanza in context of the Share Price of BOR when normally traded in the range of Rs 70 thereabouts,the whole Market Cap of BOR was below Rs 1200 crs !….This is today at Rs 1745 crs with BOR at Rs 119.40….when it touches Rs 180,the Market Cap will be over Rs 2900 crs !

Has SEBI won out here or have the Tayals ! ?….Clearly the Tayals….They have extracted Maximum Value for exiting the Banking Sector….their stake in ICICI Bank will be below 2%…..they have the Option to Hold it or monetize it by exiting fully or partially

No wonder P K Tayal had a Cheshire Cat Grin on TV yesterday…he’s awaiting the lickings !….and with him,the other shareholders too will benefit

Going by the Valuation of this Deal,look for other banks that may be forced to amalgamate as the Process of Consolidation quickens in the Banking Space….ICICI Bank has defended this swap Ratio stating it would have taken them another three years to build the current account and saving account relationships that BOR has + the Deal prices the market cap at @ Rs 6.5 crs per Branch of BOR….HDFC Bank had paid a Market Cap of @ Rs 26 crs per Branch when it acquired Centurion Bank of Punjab 

The Moral is Stay Invested with some Exposure in the Small and Mid Cap Banking Space….the Valuations will Fly when Deals are announced at over three times Book !

Cheers !

Now this is an intriguing switch to consider ! From Chanda to Shikha ?

Just this morning I was conversing with an ex commercial editor of a Newspaper….we were discussing how the Media today is corrupt and deliberately mislead investors with guided opinions by experts and planted stories….in fact he was bold enough to even accuse a leading National Daily of being a prostitute !…where every inch of the paper is up for sale !

When suddenly he popped an intriguing question….Should one switch from ICICI Bank to Axis Bank ?…An immediate reaction was that it becomes a choice between the two Managing Directors,Chanda Kochhar of ICICI Bank and Shika Sharma (ex-ICICI) of Axis Bank !

Now’s this is an interesting switch !

ICICI Bank closed at Rs 843 today and Axis Bank at Rs 914

Chanda Kochhar has been elevated to the hot seat and is trying to turnaround the Bank’s standing…last week she was angrily defending loan transfers to ARCIL as being genuine save a few where frauds were detected…she accused a rival bank of spreading malicious rumours that such fraudulent loans ran into hundreds of crores…last year she defended the bank’s creditworthiness and financial stability because of exposure to sub prime overseas Investments and the quantum of Loans that were non performing assets ..again here ICICI Bank had complained to SEBI and even filed an FIR that there was a leading Broker behind the crash in the share price of ICICI Bank….he had send out by SMS adverse rumours about the Bank to over 30000 mobile phones…If you recollect,the ICICI Bank Share Price had dived close to Rs 300 in September 2008 from over Rs 600 levels and Chanda Kochhar very courageously came on TV several times to allay fears by giving specific details and quantum of the default accounts and Investments..The Share Price has since regained lost ground

Shikha Sharma lost out to Chanda Kochhar to head ICICI Bank…she exited the Group and was appointed MD of rival Axis Bank….The Bank has just concluded successfuly a QIP at Rs 906….these two seem to be fighting it out on the bourses too !

Many view Axis Bank as a better prospect than ICICI Bank  on most fronts…so the switch should very much be a serious consideration if you do not want to increase sector exposure and have both these banks in your Portfolio…Chanda may well demand “Switch from Axis and Shikha to ICICI Bank and me !”…Equity is not just clockwise thinking !

Cheers !

Just perused the Model Equity Portfolio for India that Reliance Equities International has launched.It’s been authored by their Head of Research

Excited to know what’s in it ! ?…more  so after I tell you that the Report is titled ‘Boom and Bust’ with the tagline ‘Resistance is Futile’ !?

Turned out to be a Dampener really…no Originality at all ! …very unReliance like ! if I can say so !

The Portfolio has got 36 scrips chosen with the following criteria

• The benchmark is the Sensex
• No one scrip should weigh more than 10% of the Portfolio
• Those scrips that weigh individually more than 5% of the portfolio should not collectively weigh more than 40% of the Portfolio
• Liquidity in the Scrip must be there and the threshold is an average weekly trading volume of 4 lakh shares in the scrip
• Sector Allocation done on basis of current view which is Overweight on Energy,Materials,Consumer Discretionary and Healthcare and Underweight on Consumer Staples,Telecommunication and Utilities and Marketweight on Industrials,Information Technology and Financials 

These are my views on this Model Portfolio…I find the Investment Approach too Passive and Defensive and this is probably because the Thinking is UnDynamic…and even flawed…unless the objective is to only mirror the benchmark Sensex    

• It’s got 28 Sensex Scrips out of the 30 possible….They do not like Ranbaxy and NTPC…So there are just 8 stocks in this Portfolio that are not part of the Sensex…These 8 stocks constitute 14% of the Portfolio with Cairn having a 4% weightage,three others with 2% each and the rest four with 1% each weightage
• Top 5 Scrips have an aggregate 40 % weightage…Reliance Industries (10%),ICICI Bank (9%),ONGC and Larsen (8% each) and Infosys (5%)…this leaves it no room,as per it’s selection criteria, to buy into or increase weightage to over 5% in any other scrip,unless it reduces weightages in these Top 5 Scrips 
• The Portfolio virtually mirrors the Sensex and thus should have a Beta of 1…It thus will move more or less the same proportion as the Sensex will…..Might as well have brought the Sensex itself !…It’s clearly a Defensive Approach and  the Strategy can be termed as Passive Investment and therefore the Thinking is clearly flawed….This Portfolio will never beat the Sensex !…even if it does,it would not be by any significant percentage as the 8 Non Sensex Scrips in it have just a 14% weightage….. so what’s the point of Benchmarking !
• Even the Portfolio Sectoral Allocation more or less mirrors the Sensex Sectoral Allocation…even for the Overweights of Energy,Materials and Consumer Discretionary,the extra weightage in the Portfolio is insignificant from 1.3% to 3.4%
• This June 12,2009 Report on Portfolio Strategy states the Benchmark is the Sensex but it fails to Show the Sensex level in the Portfolio…so it becomes easy to relate perfromance…I’m assuming they have taken the Closing Sensex of 15238 on Friday,June 12,2009 as the starting benchmark
• The Report is titled ‘Boom and Bust’ with a tagline ‘Resistance is Futile’….I find this a bit too dramatic a Title with little corelation to this Model Portfolio launch,even after considering that they are positive about India’s Prospects  

Reliance Equities International sees an upside of 15%-30% upside from here in the next six months…18000 Sensex by December 2009…in the range of 16500-19000 definitely…ofcourse the risks have been spelt out

This target is based on FY 11 EPS growth of 17%-22% and a PE Multiple range of 17-19…that’s a Trailing PE of 22 on FY 09 EPS

The Current Sensex Level of 15238 (12/6/2009 closing) is 15.5 times of Projected FY 11 EPS 

So if this upside does happen,the Model Portfolio too will surge proportionately…the problem is that it will be a perfect proportion…so you will not be able to beat the benchmark…so as I stated earlier too, and I reiterate,might as well have just observed a Passive Investment Strategy and Invested in Units of the any Sensex  based Fund….because you’re not really going to be rewarded for any specific equity premium more than the market…. you’ll get what the market gets !…because the beta is One for this model portfolio

Building up your Portfolio on a specific scrip and bottoms up approach with more weightage of Non Sensex Scrips would have given the Portfolio a better thrust,without any significant compromise on Risk Taken…I’m not suggesting you chase Alphas…but atleast give your Portfolio a Chance to beat the Benchmark !

Cheers !

Bill Gross,the legendary Bond Investor labelled Collaterised Debt Obligations or CDOs as Bank’s ‘Egregious Concoctions’

‘Egregious’ is an adjective that means ‘Outstandingly Bad’

The CDOs and the Credit Default Swaps or CDSs are the Devils that are will devastatingly demonize the Financial World in 2009…Outstandings at over US $ 650 Trillion….yes Trillion !….are over Ten Times the World’s aggregate GDP….Hundreds of Banks,with huge exposures, are going Belly Up fairly soon!….as a result of this Super Leverage ! 

A year ago,USA’s biggest bank ,Bank of America quoted at US $ 43.Yesterday is sank below US $ 4  and recovered to close at US $4.84…down 66 % in January alone this year

Market Cap has sunk below US $ 31 Billion…Bloomberg puts it rather tongue in cheek…One share of Bank of America will not even buy you a Big Mac in New York City.The Big Mac Meal costs US $ 6.59 at McDonald’s in midtown Manhattan

Bank of America received a US $ 45 Billion bailout package from the US Government late in 2008….It awaits and expects more

But what has it done with this US $ 45 Billion !?…Let’s  see

• It Invested US $ 15 billion to double it’s stake in state owned China Construction Bank
• For Assets of just US $ 100 million it paid US $ 2.5 billion to Countrywide

It’s buyout of Merill Lynch is already turning bad 

Like Citigroup,Bank of America could also be on it’s way to be broken up to split it’s US $ 1.8 Trillion Assets and 243000 Employees

A Sinking Share Price indicates clearly something BIG IS WRONG WITH BANK OF AMERICA….It appears that Federal Investigators are currently all over the Bank of America  confronting it’s CEO,Kenneth Lewis with chilling evidence of huge mismatch between assets and liabilities and a severe Liquidity Problem that is threatening it’s solvency and survival

Isn’t BOA,a Constrictor !?…It seems the acronym,BOA is a Self Constrictor !  

Their Ad Tag line says it all ‘ citi never sleeps’…. Well ! Citigroup should !… so that others too can !

Citigroup is facing serious survival issues

It’s share price has dipped below US $ 4, closing on Friday at US $ 3.77, from over US $ 30 just a year ago when Vikram Pandit, of Indian origin, took over to try and save the bank. This past week itself it crashed 60%. On Friday it even reached a low of US $ 3.05 before recovering. It’s now quoted at a fraction of the Book Value and may look very attractive as it does to it’s major shareholder and saviour more than once, Prince Alwaleed bin Talal of Saudi Arabia who announced that he is raising his stake to 5% in Citigroup. 

The Bank has showed losses in the past four quarters. It’s profits dived to US $ 3.6 Billion in 2007 from US $ 21.5 Billion in 2006. The Balance Sheet at September 30, 2008 shows total liabilities in excess of US $ 1.9 Trillion supported by an asset side of US $ 2 Trillion with Shareholders Equity at US $ 126 Billion.

However cash and Cash equivalents and Short Term Investments make up just under US $ 400 Billion. A major asset chunk is US $ 1.3 Trillion in Long Term Investments of which reportedly over US $ 700 billion are related to mortgage securities and of which many are suspect… The Bank would probably require close to US $ 200 billion to bail-out of troubles… The Share Price is now below Book Value and the Market Cap has dramatically dropped to US $ 20 Billion from over US $ 200 Billion a year ago.. It has made huge losses of Billions of Dollars in Hedge Fund SIVs and is now closing nine of them them to prevent further loss

Should Citicorp be bailed out ?

It never sleeps because it cannot !…having created such a mess it’s now trying to clean it up……. Like Lehman, Citigroup too needs to finally go to sleep…. that’s my personal opinion based on both the deep financial malaise and the deep rooted arrogant and condescending psyche within the bank for decades now

I am not really anti Citigroup but my reservations on it have grown over many years now.Have a look at some of the reasons why these reservations came about.Some  have involved my clients in  India…..The Issues are varied in nature

• A client had an account in Citibank and had issued a cheque which bounced… He said this was not posssible and obtained a letter from Citibank which acknowledged their mistake and asked me not to judge the financial position of the client adversely
• A Non Resident Client has Deposits with BCCI, a notorious bank which collapsed. He had given Citibank the Deposit Receipts with the authorisation to them to present them to BCCI on due dates and have these deposits transfered to Citibank… Citibank forgot to do this and BCCI went bust and the clients monies got locked up … I had to personally intervene and fire the Bank for this… would you beleive it that the Bank said they reserved the right to file a case against their own concerned Division responsible for this crisis… Fortunately, the Citibank CEO, Mr Jerry Rao, intervened into this issue and personally requested the liquidator to let Citibank release the Monies to my client and they would later claim the clients BCCI deposits
• Before the Dematerialisation of Shares, all shares sold had to be physically delivered to the Markets. A Client had sold shares which were pledged against an overdraft in Citibank. He had already applied to the bank to withdraw the share certificates…. Citibank failed to deliver on their stated due time to collect the same… I had to personally go and fire the Bank offcials and warn them that if they do not give the shares the same day they would be liable for the auction costs and price differentials… The Bank’s safe custody facilities were located elsewere… but they urgently despatched their officer to get  the shares
• In 1991/92 just before the late Harshard Mehta’s Bank and Stock Scam was exposed, I had approached the bank to place Certificates of Deposit of Good Amount with the Bank for  Clients… The Bank refused to entertain me because, as I later learnt, they preferred to restrict their association and involvement with only a certain cartel of leading Brokers who were on the other side of the Road of the Big Bull, the  Late Harshad Mehta… When Hell broke lose and the Big Bull Banking Receipt (BR) Scam unfolded in April 1992, it is strongly rumoured that Citibank hired Hotel Rooms and had shredders installed in them and Day and night, their employees destroyed evidence of questionable deals… The Bank’s Operating License in India was under threat….. the Citigroup Global CEO at the time, John Reed, had to personally fly in and, I believe, warn our Government that if they took away the License then Citibank would withdraw Deposits of Billions of Dollars from India…at the time we were very precariously poised with our FX reserves which at one point had dipped to just US $ 1.7 Billion  
• When I was on an assignment in Doha, Qatar last year, I learnt that Citigroup was lobbying hard to enter Qatar in a big way as huge gas reserves and rising prices were proving to be a goldmine for the country and the bank wanted to tap into this wealth… Qatar was not to keen as when it was facing financial issues, Citigroup had disdainfully refused to support the country… banks which did support Qatar when it needed it most, rightfully were allowed to scale up in Qatar and reap the advantage of tapping into the growing wealth 

Citibank had this very transparent policy of hiring young Indian Professionals whose parents were either well known Industrialists or held top and influencing and powerful positions in Private and Public domain… the lure was material… wisely, many realised that they were being used and expoited and left the bank… a close friend was man enough to show them his middle finger when they blatantly told him they would offer a job if he got along with him the account of a Leading Indian Company which his father headed   

So it’s a people’s deep rooted malaise as well…extremely difficult to cleanse this sort of psyche

The US Government may not allow the demise of Citigroup as it would affect 387000 jobs (Total No of Employees as on December 31, 2007)…. it may chose the best available option to merge it with another bank….or may just nationalise it !…. Banks work and grow and thrive on Trust…. and if Trust is affected then the Total Liabilities of US $ 1.9 Trillion will start to play up in the immediate short term….. Long Term Investments of US $ 1.3 Trillion would be unable to fund this

Citigroup CEO, Vikram Pandit, has just stated intentions to lay off 52000 employees by June 2009 and that he is not in favour of splitting up the many divisions of Citigroup as a weapon to battle falling share prices…. He’s battling the Citigroup Board on this one !

The Clock is Ticking Loudly for Citigroup…It needs a Miracle this Christmas