Dick Bove's weird love story with Citi is one that is complicated and needs a lot of nurturing. Although it will never reach the highs of the one he had with BofA (Ken Lewis was a "visionary and tactician" who "was torn from his post by politicians lacking any of Mr. Lewis' skills and successes.") our Rochdale analyst friend is still full of hope.
Bove said in a report today that Citi -which reported a $7.58 billion loss in the fourth quarter -needs to be destroyed before it can succeed. The firm will be able to "emerge from the rubble" once it sells what he delicately describes as its "remaining lagging operations": commercial credit, The Associates, Primerica, the remainder of Smith Barney and large portions of its mortgage and other weakened consumer portfolios.
"This will complete the destruction and elimination of the old Citigroup."
This makes Bove emotional and he's not afraid to show it. What will emerge, he said, will be Citicorp, a company that will have a "unique relationship with the world's largest corporations in capital markets, banking, and payment services," a "world class credit card business," and a "specialized private bank serving the wealthy and powerful across the globe."
Yes, sure he has a few reservations. While the company's non-performing assets are declining, it is just due to sales of assets, not an improvement in the internals of the related businesses. Also, the results in the US and Europe are disappointing ,and loan losses will rise again in the first quarter if sales of distressed holdings slow.
Plus, there is that small issue of the government still having 7.7 billion shares of stock that it wants to sell.
But hey, all is well in the land of unicorns Bove reassures us, because"Citigroup is executing on its grand strategy."