Whalen: Citigroup Will Need $200 Billion Of Capital This Year


Chris Whalen of Institutional Risk Analytics (writing at the Big Picture) estimates that Citigroup (C) alone will soak up all the capital Geithner has allocated for bank equity injections: $200 billion.

If there is a smart economist or analyst out there who is confident that Citigroup is NOT insolvent, we’d love to hear from them. Because everything we read persuades us that this company is a dead man walking.

Chris Whalen:

Citigroup Dec/2008:

Revs $106bn

SGA $ 61bn

Provisions $33bn

NCLs $22bn

EBIT -$23bn

So obviously provisions can’t go up any more – unless we shoot a lot more people. Think about NCLs in 2009 3-4x 2008 plus further M2M losses equal to that number.

Remember, C’s efficiency is in the 60s while JPM/BAC are in the low 50% range. Makes a huge difference. Or in other words, the $200bn in additional equity that that Tim Geithner talks about for ALL the banks is just enough for loss absorption Citi in 2009.

Now you know why I keep saying that eventually the numbers will force Obama to let Sheila Bair clean up the mess at C, haircut the bondholders and get on with the sale of much of what we now call Citi.  The markets are going to see the C numbers, the markets will react and Washington will finally be forced to have an adult conversation with the global community as to how much we haircut the bondholders.