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Friday, October 13, 2006

What Does Citi Want With Societe Generale?

Stocks: (C)(JPM)(BA)

Citicorp want to raise the amount of its revenue that it gets from overseas from 45% of its total to 60%. The rumor is that the big US bank could accomplish much of this goal by purchasing French banking giant Societe Generale.

Wall St. would argue that Citi's largest problem is not the geographic revenue mix but cost controls. Why look overseas when the largest problem is in the US?

Citi's stock has badly lagged its two primary competitors, Bank of America and JP Morgan, over the last year. While Citi's stock is up just over 10%, B of A has risen 25% and JPM is up over 40%.

Why should Citi shareholders want to be diluted or have the bank bring on more debt to pick up Societe Generale when the US bank has plenty of troubles at home?

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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