Citigroup Suffers as Profits Plunge

The international investment banking wing’s profits have fallen 83% between October and December due to the Eurozone economic crisis. These cataclysmic numbers provide a stark and jarring contrast to the bank’s first annual profits since 2007.

During 2010, the bank turned in a profit of $10.6 billion. However, the bank now seems to be suffering again - its shares have also fallen by 6%. Some speculate whether the bank, which required a bailout of $45 billion in taxpayer dollars in the past – will need more of this aid in the near future.

According to David Schwartz, a Wall street analyst at Morgan Stanley, working in the emerging markets desk, Citigroup’s speculation in the real estate market let to this crisis. “Citigroup’s main issue was mortgage backed securities and the CDO's.” Schwartz said Citigroup did not have enough money to cover their losses after the real estate market began to decline. Schwartz also says this crash will harm “global connectedness of the financial world” and cause “panicking which will spread from American investors to the Europeans.”