Despite a lot of support on the sell-side and what would otherwise seem to be an excessively low valuation, Citigroup (C) just can’t make any headway. The latest operational issue, consent orders tied to meaningful shortfalls in the company’s operational practices, only further erodes the already-shaky position Citi held with many investors and likewise shows that even after years of efforts to reposition and restructure the bank, there are still significant deficiencies.
I can understand why investors may see the Citi news and be reminded of Wells Fargo (WFC). While I would argue the underlying cause of the Citi orders was less about moral turpitude and more about ineptitude, I don’t think “we’re not corrupt, we’re just inept” is a particularly compelling defense. Citi continues to trade at a very wide discount to apparent fair value, but I’m increasingly worried that this bank may never earn its cost of equity capital on a sustained basis, and while banks in that situation can still outperform, it’s a much steeper hill.
Read the full article at Seeking Alpha:
Citigroup Keeps Tripping Over Itself, But Trades At An Undemanding Valuation
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