Financial markets are often cruel and unforgiving. A perfect example is the shocking performance of Citigroup’s share price. In the middle of a roaring bull market, it’s languishing at around $45, almost exactly where it was trading five years ago. It is impossible to bump into a Citi banker without a complaint about the insipid performance.
So should we feel sorry for Citi’s long-term shareholders? Some would argue that the market is right to require a calamity premium. Citi has suffered more than its fair share of mishaps in recent years. But do they justify its shares continuing to trade sideways? Only once since 2001 has it broken above $50 (in the spring of 2004). And yet it has been a long time since Citi found itself in the headlines for the wrong reasons. Surely the markets can learn to forgive and forget.
It has been said before that Citi’s sheer scale is a problem. There’s so much operational and legal risk that investors are wary. Remember Citi’s market cap is about $235 billion. It is everywhere, and in a world where quick responses to opportunities and risks is essential, a 33-strong management operating committee might get in the way.