Citibank has come to an agreement with the US Securities and Exchange Commission (SEC) to buy back several billion dollars worth of auction rate securities, the risks of which had been misrepresented.
The SEC had recently looked into the situation and decided Citibank had mismarketed and sold the securities as being less risky than they were. Citigroup had promoted them as being as safe as similar cash based products though this is not the case.
Although Citibank are buying the securities back it is something they could really do without since they have been hit very hard by the collapse of the sub-prime lending market. Financing the buyback will damage the bank further as they will have to reimburse any customers who sold for a loss, on top of paying fines worth USD100 million.
A study by the Abbey National Business Bank department has found that around a third of small business owners are worried about the coming 12 months.
They see their economic prospects for the period as being of concern and even poor according to the feedback received by the Abbey National. About 12 percent of respondents claimed to see an increase in clients not paying bills, with about thirty percent seeing payment delays.
On a positive note though the Abbey National also saw some 14 percent of small business owners feeling that economic difficulties will bring opportunities. It is all about perspective said a spokesman, that and the ability to effectively manage cashflow to maintain the business when money is slow to come in.
The German retail banking arm of Citibank, part of the Citigroup financial giant, saw the number of interested German parties drop to one when Commerzbank withdrew from the race.
There is interest from outside Germany still, but within the borders of the country only Deutsche Bank remains an interested party. A couple of other big European players are looking at Citibank in Germany with interest, with a move expected before the end of the month. It continues what has been a turbulent time in the German banking market as a number of organisations have changed hands recently.
With around 3.25 million customers the German Citibank is expecting offers in the region of EUR4 to EUR5 billion, especially as it runs profitably and is one of the leaders in consumer financing, generating handsome returns.