Chapter 1998 Citibank's Request for Help

In the previous life, Lehman Brothers did not file for bankruptcy protection until September 14th, but in this life, it was 2 days earlier.

It should have been announced on the 15th that Bank of America's urgent acquisition of Merrill Lynch was not brought forward.

Of course, the situation of Merrill Lynch is not at all easier than that of Lehman Brothers. If no one rescues them, their bankruptcy will be a matter of minutes.

But the advantage of Merrill Lynch over Lehman Brothers is that they have one of the best securities trading companies in the world. This capital is a very good and healthy asset. Whoever gets it will definitely benefit a lot for long-term development.

And this is the most important reason why Bank of America finally chose to bail out Merrill Lynch instead of Lehman Brothers.

However, on the 13th, Xiao Qi received a call from Jabil, the executive vice president of Citibank.

Not long after that, Xiao Qi met the most powerful person in Citibank in the reception room of Fairy Company.

"Mr. Jabil, you said that you can just call if you have something to do, why do you want you to come here in person?" Xiao Qi shook hands with him and said, "But when did you come to Rongcheng? Why didn't I hear from President Qu?"

"I just got off the plane." Jabil said with a frosty face, "Qi Shao, I'm here to ask you for help."

"Huh? What do you mean?" Xiao Qi asked in surprise.

"To tell you the truth, the situation of Citibank is very bad now, and it is only one step away from bankruptcy. We have tried everything, but there is no way to save Citibank." Jabil said in a deep voice.

Citibank is going to collapse?

its not right!

In the previous life, although Citibank suffered heavy losses, but because they had the support of the physical bank and the main deposit and loan business was very stable, they finally turned the corner.

This is even more so in this life. They also received Tang Mingxiang's 4 billion US dollars to buy Chose Girl's shares. It stands to reason that they are not so fragile.

Thinking in his heart, Xiao Qi smiled and said: "Mr. Jabil is serious. Citibank's business is all over the world. How could it be possible to reach this point because of the subprime debt? You will definitely be able to turn the crisis into safety."

Jabil shook his head. Seriously said: "Unfortunately, you don't know that Citibank not only suffers serious losses on subordinated debt. Although we also do bond sales and trading. But our main business is the banking industry, not like theirs. Specialized investment banks. The loss of this amount is really not much, accounting for more than 30 billion US dollars, but many of the companies we hold shares have fallen into subordinated debts, and this amount is at least 100 billion US dollars. More than US dollars! To rescue them, it will cost at least 800 billion US dollars. Where do we have this money?

It’s impossible not to rescue them, because once this matter is disclosed, everyone will lose confidence in our Citibank. If deposit users panic and cause a panic run, our Citibank will definitely not be able to hold on what! "

Xiao Qi nodded when he heard the words, he understood Jabil's meaning.

It turned out to be the case.

If you want to say what commercial investment banks are most afraid of, it is a run on!

Usually commercial banks deposit and loan interest rate ratio. The difference is very small, but the loan business is still a big income of commercial banks, except for interest. There are also many things that can be done with loans, such as borrowing as a condition. Discuss the distribution of shares or other benefits, etc.

And investment is the same, each bank has its own investment department.

Where does the money for these investments come from?

It must come from deposits. They are not the central bank, and they cannot print banknotes themselves.

So they usually lend out people's deposits, or use them for various investments, leaving only a small amount of money in the bank for backup.

In order to prevent commercial banks from excessively operating people's deposits, maintain the liquidity of assets, strengthen the solvency of banks, and prevent chained commercial banks from failing. In the 1920s and 1930s of the 20th century, Western countries established a "deposit reserve system".

Usually, commercial banks are asked to pay 8% of the total bank deposits to the central bank. Allowing the central bank to take custody on its behalf is also a guarantee for depositors.

When the financial situation is critical, the central bank can also adjust the financial market by raising and lowering the deposit reserve ratio to avoid huge shocks.

But in the 1980s and 1990s, because Wall Street invented various financial derivatives, and these financial derivatives made it easier for commercial banks to mobilize funds, and it was easy to escape the supervision of the central bank.

Therefore, the central bank's "statutory deposit reserve system" has become less and less effective in regulating finance. Finally, many western developed countries such as the United Kingdom, Canada, and Sweden directly reduced the deposit reserve to zero.

But the United States is still vigilant against Wall Street. Although it has relaxed, it does not mean to completely reduce it to zero. Otherwise, if Lehman Brothers collapses, countless investors will suffer even more losses.

This "deposit reserve system" is actually not so secure, because you only turn in about 8% of your deposits, what about the remaining 92% of your savings?

Because of this, if 30% of depositors of a bank go to withdraw money together, the bank will go bankrupt.

Even if more than 20% of depositors withdraw money, the bank will definitely fall into a huge crisis, or it may go bankrupt.

This is commonly known as a run on.

The root of the run is not how much money a bank has left, but that the people have completely lost confidence in the bank. They are worried that their deposits will be wiped out, so they want to get their deposits back urgently.

If you have confidence in this bank, even if less than 1% of his funds are in hand, there will be no wave of runs.

For example, the six major commercial banks in Huaguo, even if they only have 1% of the funds, the people will not worry, because they know that even if these banks have problems, the country will not ignore them.

Because they believe in the country and its credit, Hua people believe in state-owned commercial banks.

But in the United States, there is no such good thing. Citibank is a private joint-stock bank, not to mention Citibank, even the Federal Reserve, which prints money, is also a joint-stock company, not a state-owned one!

The credit of your Citibank can only be your own, and you can't rely on anyone at all, and it is impossible for others to help them take responsibility.

It is also because of this that Citibank is now in a panic when it faces such a big crisis.

At this juncture, Jabil came eagerly, and naturally asked Xiao Qi for help.

"What do you want me to do?" Xiao Qi asked him.

"I hope that Citibank can buy more shares of Dream Pad or Dream Stars from very few hands." Jabil said: "The shares of Dream Pad and Dream Stars are excellent assets that people dream of! If Citibank can buy These shares of Fairy Company prove that we have strong strength and strong capital, and the public will be at ease with Citibank, and then there will be no run. As long as we give us some time, Citibank will definitely be able to survive down."

He was right. In his previous life, Citigroup survived abruptly, and then developed well. It was far from the embarrassment of the five major investment banks.

This is also due to the fact that Citigroup has a deep foundation. It started business in Huaguo as early as the Qing Dynasty, and other European and American countries are the same. This commercial bank with a history of nearly 200 years, as long as it is not killed by a stick, will definitely recover. Opportunity.

Looking at Jabil's nervousness now, Xiao Qi analyzed that it might be because Lehman Brothers collapsed too suddenly, and Citibank had already planned to use Fairy Company to strengthen its reputation, so it came rushing here.

The shares of Fairy Company's products are definitely not the only card of Citigroup, and people from other factions must be looking for other ways to save Citibank.

No matter how they fight with each other on weekdays, they also know that with Citibank, they can have power. Once Citibank falls, they will lose money, power, let alone fight.

It's just that whoever finds the best and most effective cards will get more benefits in the process of meritorious deeds and rewards.

Since the release of the first Dream Pad, Fairy Company has become the darling of the investment market. Countless companies and funds want to invest in Dream Pad and Dream Stars. The hard currency of gold not only has a huge dividend profit, but also has a long-term value-added function.

It's a pity that Fairy Company has only sold shares so far, and it's not for financing, but for forming an alliance to resist pressure from all sides.

As a result, 20% of the shares have not entered the hands of ordinary investors at all, but are only held in the hands of several large companies and super rich people.

When will Fairy Company sell its shares for the second time, how much will be sold, and who will get it, has always been a hot topic of discussion among financial investment companies on Wall Street and even the world.

In this uncertain time, if Citibank announces that it has acquired the shares of the fairy company Dream Pad or Dream Stars, it will be a great encouragement to any Citibank customer, and it will definitely calm people's hearts!

Think about it, so many powerful super companies can't buy the shares of Dream Pad and Dream Stars, but I, Citibank, can buy them. Doesn't this mean that I am stronger than them?

How could such a powerful company encounter bankruptcy?

There is no need to worry about it, right? (to be continued ~^~)

PS:   I don’t know if I can understand the 2008 financial crisis when I write it this way. If everyone can understand it, then the show will be very happy, because it is written in an easy-to-understand manner, haha.