Citi's Institutional Investors Will Have To Sell

Think Citigroup has gone as low as it can go? Guess again.

60 four per cent of Citi’s shares are owned by institutional investors such as pension funds and endowments. According to the Financial Times, the four dollar share price means these people will have to sell. What’s more, prime brokerage clients are almost certainly moving funds out of trading accounts now as their risk officers tell them they simply cannot justify exposure to Citi at this stage.

From the FT:

“Some asset managers, pension funds and endowments adhere to internal standards that mean they cannot hold stocks with a value of less than $5. With the shares below that mark, some analysts suggested a further bout of selling might take place on Friday…

Inside Citi, the biggest fear is that the stock market slide would cause retail and corporate customers to take their deposits elsewhere, according to people close to the situation. However, they stressed there had been no signs of that so far. Unusual deposit movements would be one of the key variables that the Federal Deposit Insurance Corporation, which insures US bank’s deposits up to $250,000, would consider in deciding whether to intervene at Citi.”

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