Last week, banking giant Citigroup Inc. (NYSE:C
) announced that it
was exiting the mortgage brokerage business, where many banks have been
grappling with the fallout from the housing collapse. According to
Citigroup, most of the 300 employees tied to the brokerage business will
be reassigned. The company's spokesman Mark Rodgers said that job
"discontinuances" may be in the "low double digits", and that Citigroup
will now focus on its own retail and correspondent channels instead.
According to Rodgers, the mortgage brokerage channel generated less than
10% of Citigroup's $67.9 billion of mortgages last year.
On another note, the company appointed James Cowles, the head of
markets, as the chief operating officer for the Europe, Middle East and
Africa (EMEA) region, with Peter McCarthy as the chief administrative
officer. The move is part of CEO of EMEA Michael Corbat's restructuring
efforts for the division that produced about 16% of the bank's $78.4
billion in revenue last year.
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Citigroup ended last week at $33.54, experiencing a 4.85% rise on
Friday, along with the across the board rally over the better than
expected US unemployment figures. The company's stock has gained 25.34%
since the start of the year, after slumping 44% in 2011.
Although the bank experienced a drop in its recent fourth quarter
earnings, analysts are maintaining their optimistic view about the bank.
On 1 February, Wells Fargo Securities analyst Matt Burnell upgraded
Citigroup to a "buy" and raised the target price to $35-37. Despite
"modest expectations for investment banking", Burnell expects the bank
to deliver higher EPS growth as it achieves positive operating leverage
in regional consumer banking, succeeds in meeting its target expense
reduction of $2.5-3 billion this year, increases share repurchases and
continues to wind down Citi Holdings. UBS also maintained its "Buy"
rating and target price of $43 because of its low valuation and focus on
risk reductions. In its research note, UBS wrote, "Citi has made solid
strides in improving risk management, including winding down Citi
Holdings." Jeffrey Harte of Sandler O'Neill rated Citigroup a "buy" with
a $55 target price, based on its low price to book value, non-European
international growth, small US mortgage exposure and dividend increase