NEW YORK — Citigroup has a world of problems.
The bank is proud of its global reach — 1,400 branches in 46 countries. But in Asia, the economies of China and India are slowing. And Europe, the source of one in three dollars that Citi brings in, may be on the brink of financial disaster.
Citi rivals JPMorgan Chase and Bank of America have Europe problems too, but they also have U.S. branch networks about five times the size of Citi’s. And bank business in the U.S., like the economy, is improving.
“The effect of a contagion from Europe will be catastrophic for Citi,” said Jeffrey Sica, chief investment officer of Sica Wealth Management, an independent wealth manager.
At year’s end, Citi held $33.4 billion in debt issued by European countries and loans to businesses in debt-hobbled countries. Fitch Ratings, a prominent credit-rating service, said in November that Citi was the most exposed of the big U.S. banks.
Appetite for risk has gotten the bank in trouble before. Of the major U.S. banks, Citi was hit hardest by the 2008 financial crisis. It had to be bailed out by the federal government twice, for $45 billion cash and guarantees worth hundreds of billions more.
Investors have been appalled by the bank’s inability to rein in costs. Just last quarter, Citi set aside 3 percent more to pay its bankers, $6.4 billion, even though the bank’s revenue fell 7 percent.
