That collapse began a steady decline in Citigroup shares that snowballed this week as speculation grew that the bank might require a government bailout, a forced merger that would crush common equity holders, or an ouster of Mr. Pandit.
In the last five days alone, more than half of Citigroup’s market value was vaporized, and investors and analysts intensified calls for the bank to find ways to lift its stock price, including splitting the company, selling pieces or selling itself outright.
“They don’t have the sovereign wealth funds or other big investors to turn to anymore,” said William Fitzpatrick, an equity analyst for Optique Capital Management. “There are two remaining options: a federally forced merger or nationalization.”
A forced merger with who? Doesn’t everybody realize that Citigroup is the largest financial services organization in the world? How can they solve Citigroup’s underlying problems by merging them with someone who is smaller?
All this crazy talk surrounding Citi is making me think that John Hempton was close to the truth with his crazy little conspiracy theory.