FT.com / Companies / Financial services - Citi struggles to reduce EMI loan exposure
Citi deal to sell leveraged buyout loans to a group of private equity shows the desperation of Citi for two reasons:
1. Citi financed $9 Billion of that purchase, and
2. It took out all the questionable loans that it could write down in the future like EMI loan in the story. In other words the loans that Citi got rid off are good loans.
Next week will be interesting with JPMorgan Chase, Merrill Lynch, Citigroup and other large banks and financial services companies reporting their first quarter earnings. With their reporting could answer some questions about :
1. Have the financial losses begun to decline?
2. Is guidance going to show that we are starting to see the light at the end of the tunnel?
If the answers to these questions are worse than the negative sentiment or expectations of investors, then financial stocks probably are going to get knocked down again.