Buried in this morning’s story about board-level infighting at Citi (C), the name of the regional bank it is pursuing: Chevy Chase Bank. There’s it’s Wachovia substitute for you. It’s a small regional based in the mid-atlantic, and Citi is only one of a number of bidders, but still! This is just what they need to shore up deposits, close redundant branches, and get things back on the right track.
For a great read on the current situation at Citi and the takeaway from rumours it might dump its chairman, check out Felix’s post:
Citi might well turn out to be Hank Paulson’s largest and biggest headache. There’s no one he can sell it to — it’s far too big already. Which means that Paulson’s only real option, if things deteriorate much further from here, is nationalization. Bits of it could be sold, at a price — the retail bank to Santander, perhaps; other bits to JP Morgan or Goldman Sachs — but the losses to the taxpayer would be enormous, and the disruption associated with breaking Citi up and then trying to integrate the pieces in the middle of a major financial crisis would likely be devastating to the economy.
The one option being mulled right now — replacing Win Bischoff with Dick Parsons — is clearly taken straight from the deckchairs-on-the-Titanic playbook. Parsons, remember, is the man about whom Joe Nocera said that “all his professional life, he’s wanted to be seen as someone who never seems to break a sweat”. In any case, Bischoff isn’t the problem. The problem is that Vikram Pandit gave himself altogether too much time to get smaller, and then decided his best chance at salvation was to get bigger — by buying Wachovia. Now, it’s too late: the die has been cast. Will Citi buy Chevy Chase Bank? It really doesn’t make any difference either way.
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