Who respects Citigroup? Not investors, it seems. According to Barron’s, a financial services group that generated nearly $18 billion in net revenue in 2003 trades at a lower multiple that New York-area banks such as Commerce Bancorp Inc, North Fork Bancorp Inc. and New York Community Bancorp Inc. In fact, Citigroup is currently trading at less than 13 times its projected 2004 profit of $20 billion and at 11 times its estimated 2005 net income.
It seems investors find Citigroup too large and complex to value. There are concerns too about its exposure, especially at a time of mounting post-Enron regulatory interest. Barron’s says Wall Street is also concerned that Citigroup is on the verge of a major deal – State Street and Deutsche Bank are most often mentioned as the likely targets, though parts of JP Morgan Chase (including the investor services business) may also be divested in the wake of the Bank One merger – that will be both expensive and time-consuming. Another potential target is Washington Mutual, the largest American savings and loan.