If they lose out on this takeover, this will be the outcome in US:
As far as it goes, Citi was the largest in terms of assets before the crisis and now, they are ranked 4th in terms of deposit. Anyway, their main stream was in capital markets, and not deposits. Comparing itself to the other 4 large commercial banks, it has to do something in order to stay competitive in the market.
Other news include the 700 billion bailout plan. It was finally approved with a few amendents and the main core of it was:
- protecting tax payers
- curbing executive payouts
- new accounting rules
- bank deposit caps are increased
Yen/USD is currently at 105.31-105.38 + 0.30, and nothing much else apart from markets still falling despite the bailout plan. One must consider this fact, it doesn't mean that the government approved the bailout plan and markets will turn better straight away. The credit crunch may still last a while, probably into next year to allow banks to get liquidity again to start lending again.
The logic is simple; just like when you fall and sprain your leg. The doctor can give u painkillers but it doesn't mean you can walk back as per normal immediately. Unfortunately, some traders take such weaknesses in the market and exploit to make capital gains and the market turmoil will not be easily curbed.
High chance is as long as the dust starts to settle down and good news are coming out from banks, it will probably be a good chance to start buying in strong companies.
