Analyst Whitney Says Citi Has to Cut Dividend More[CitiGroup]

Reuters ^ | 21 Feb 2008 | Svea Herbst-Bayliss

[BGHater]

Meredith Whitney, Oppenheimer & Co's banking analyst who was the first to say Citigroup Inc. (C.N: Quote, Profile, Research) needed to cut its dividend last year, said on Thursday the bank would need to cut payouts again and raise more capital.

Whitney also told television channel CNBC she believes financial stocks, which have been weak recently in the wake of the credit crisis, housing crunch and fears of a recession, could fall at least another 15 percent and as much as 50 percent.

"The best case downside scenario is that there is a 15 percent downside in the financials; worst case is 50 percent downside in the financials," Whitney said.

Citi has already raised $12.5 billion from foreign funds this year after posting heavy losses last year. It also cut its dividend 41 percent. Citi's shares have lost a third of their value since Whitney's call last year.

[khnyny]

Meanwhile:

NEW YORK: World’s largest lender Citigroup has awarded its newly-appointed CEO Vikram Pandit stocks worth $30 million, even as the India-born executive has decided to forgo a cash bonus at the crisis-ridden bank.

The 1.1 million share units and options for additional three million shares being awarded to Pandit is estimated to be worth about 30 million dollars (Rs 120 crore) — an amount close to six times of total compensation paid by all the Indian banks together to their top executives last fiscal.

Nagpur-born Pandit was conferred by the Indian government Padma Bhushan, a prestigious civilian award, yesterday.

The stock and options award was disclosed by Citigroup in a regulatory filing here late last week. This is higher than the total bonus worth 23.9 million dollars given to previous CEO Charles Prince last year. Prince got 10.7 million dollars in stock and 13.2 million dollars in cash bonus.

The salary of Pandit, who took charge of Citigroup in December 2007 after Prince resigned amid mounting subprime crisis-related losses, is not known as yet. However, Prince got an annual pay package of about 26 million dollars (about Rs 100 crore).