My Wall Street Journal Research was conducted on Citigroup, a financial services company that brings together banking, investments, and insurance under one umbrella.  From Junuary 9, 2002 to February 21, 2002, there were 12 articles mentioning the firm in the Wall Street Journal.

International Articles

1.  Wallin, Michelle.  "Argentine Bill Could Force Big Companies Into Default," Wall Street Journal, January 30, 2002: A14.

The Argentine Government is set to pass a law that could lead to defaults on an estimated $30 billion of corporate debt owed to foreign creditors.  Companies at risk of default are the Argentine unit of Citigroup Inc.'s Citibank NA, Verizon Communications Inc.'s CTI Holdings SA, and Telefonica Argentina SA. 

This law would temporarily prohibit many companies from transferring money abroad.  This would make it impossible for them to meet foreign-debt payments.  This move is aimed at maintaining scarce foreign reserves. Most companies involved in this hope that the law does not make it through the house or that it is vetoed.back to top
 

2. Lifsher, Marc.  "Peru Returns to Markets With Plans for Bond Sale," Wall Street Journal, February 5, 2002: A15.

Peru is planning to return to the capital markets with the planned sale of as much as $1.5 billion of sovereign bonds.  $1 billion of the bond sale will go toward redeeming Brady Bonds, securities floated to refinance debt accumulated during the 1980's and 1990's. Peru currently has $3.7 billion in Brady debt outstanding.

The Underwriters, Citigroup's Salomon Smith Barney and J.P. Morgan Chase and Co., say the bonds are expected to be priced and put on the market late in the week of February 4th.  The bonds are expected to provide the Peruvian government with some credibility in the eyes of investors.back to top
 

3. Karp, Johnathan, Shawn Young, and Paul Beckett.  "U.S. Firms Assess Damage in Argentina," Wall Street Journal, January 9, 2002: A10.

Argentina is currently experiencing a large currency devaluation.  This is very frightening to the U.S. multinational corporations operating there.  U.S. banks , which have a $10 billion exposure to Argentina, are now required to allow dollar loans of less than $100,000 to be repaid in pesos.  This means that they are going to be accepting payments worth less than the original loans.

Citigroup Inc. chairman Sanford I. Weill said, "its to early to really understand how all of these things are going to play out."  Even though Citigroup is one of the U.S. multinationals operating in Argentina, they do not expect the countries difficulties to hurt results significantly.  This is because Citigroup's total revenue from Latin America, excluding Mexico, was $1.2 billion in the first nine months of last year, a small fraction of its total $61.7 billion.back to top
 

4. Wallin, Michelle.  "An Argentine Bank Struggles With Rumor," Wall Street Journal, January 17, 2002: A10.

In Argentina the public fears Banco de Galicia and Buenos Aires SA, Argentina's largest private sector bank, may be about to collapse.  Banco de Galicia and Buenos Aires SA is one of the countries top five banks owned by Argentinians.  For the last 30 days there has been a smear campaign against the bank because it has private domestic, and not foreign, shareholder equity.  They were even forced to take out full-page newspaper ads to reassure customers that they weren't going to collapse.

The rumors of failure are also due to the fact that all of Galicia's competitors have foreign partners with deep pockets.  A couple of those competitors are FleetBoston Financial Corp. and Citigroup Inc. of the U.S.  The Government is deciding how to loosen withdrawal limits and how to bail out the sector.  President Eduardo Duhalde said he wants to preserve all of the banks, including Galicia.back to top
 

Enron Related Articles

5. Gasparino, Charles and Randall Smith.  "Merril Executives Invested Their Money In Partenership Firm Was Selling For Enron," Wall Street Journal, Janary 30, 2002: C1: C12.

Nearly 100 Merril Lynch and Co. executives invested more than $16 million of their own money in a partenership that the securities firm was selling for Enron Corp.  The partenership that the Merril Lynch executives invested in was known as, LJM2 Co-Investment LP.  This partenership was controversial because it allowed Enron officials to make more money working part time on their partnerships than working full time for Enron. 

More than $386.6 million total was invested into the partnership by a variety of companies including, Merril Lynch, Citigroup Inc., and First Union Corp.  Citigroup which committed $15 million, funds came from the firms own assets and not from outside clients or individual investment bankers.back to top

6.  Pacelle, Mitchell and Jathon Sapsford.  "Enron's Advisers Seek Higher Bids For Energy Unit," Wall Street Journal, January 11, 2002: A4.

As of the afternoon of January 10, 2002, Representatives of Enron Corp.and its creditors are still negotiating in order to get the highest possible offer for parts of the companies wholesale trading unit.  The top bidders as of January 11 were Citigroup Inc., UBS AG, and BP PLC.  Enron sees it as a major priority to try to get the energy-trading business up and running again. 

The deal is expected to be reach a decision by the morning of January 11, 2002, when Enron is scheduled for New York federal bankruptcy court.  It is possible that Enron will ask the court for more time to negotiate, or announce that it found no offers acceptable.back to top

7.  Pacelle, Mitchell and Rebecca Smith.  "UBS Emerges as Top Bidder For Enron Trading Unit; Big Obstacles Remain," Wall Street Journal, January 14 2002: A3; A8.

UBS AG, a gaint Swiss financial firm, has emerged as the apparent victor to acquire Enron Corp.'s North American energy-trading operation.  Enron hopes that the deal will bring new life into it's trading business, which was once the generator of 90% of the company's profit.  UBS looks as if it is going to beat out it's only other competitor Citigroup Inc. 

According to the deal, Enron would transfer it's wholesale energy-trading operation, including a staff of 800 people and computer systems and hardware, to UBS Warburg, the investment banking arm of UBS.  The UBS will not pay Enron any money up front, but it will pay Enron royalties amounting to one-third of the energy-trading enterprise's pretax profit for a 10-year period.  The UBS could also opt to pay Enron 5.75 times Enron's prior-year royalty payment in years three, four, and five for each one-third share of royalty eliminated.  This would completely end Enron's royalty payments by the end of the fifth year.back to top
 

Directly Related Articles

8.  Beckett, Paul.  "Citigroup Post 36% Rise in Earnings," Wall Street Journal, January 18, 2002: A3.

Due to Enron's demise and Argentina's problems Citigroup Inc. lost almost $700 million before taxes.  However, the nations largest financial-services firm still posted a 36% rise in net income.  This shows how Citigroup's variety of services combined with a cut of expenses is paying off for the firm.  Citigroup operates in 100 countries in consumer and corporate banking, assest management, and insurance.  They are also expected to post double-digit earnings gains this year despite the economic slump.

Citigroup's net income rose from $2.84 billion, or 55 cents a share, to $3.88 billion, or 74 cents a share.  Analysts do caution Citigroup that it could take more hits from Argentina's problems, depending on how quickly the country recovers.back to top
 

9.  Beckett, Paul.  "Citigroup Taps Willumstad For President," Wall Street Journal, January 16, 2002: A3; A6.

Citigroup Inc. named Robert Willumstad, head of it's vast consumer operations, to the vacant post of president.  Getting promoted to this spot makes Willumstad the top contender for the top job in one of the most closely watched succession races in American finance.  Citigroup's chief executive, Sanford I. Weill, turns 69 years old in March.  Mr. Weill denies any plans saying that he will retire soon and says that this appointment should not be thought of as establishing an heir apparent. 

Many insiders say the Weill will step down within a year while others say that Weill will be reluctant to hand over the reins of power.  Even though Willumstad has been appointed as the President it does not necessarily mean that he will be named chief executive after Weill retires.  The last president, Jamie Dixon, left Citigroup after a dispute with Weill four years ago.back to top
 

Various Articles

10. Frank, Robert.  "More and More, Mergers of the '90s Are Becoming Today's Spinoffs," Wall Street Journal, February 6, 2002: C1; C17.

From Tyco International  and Merck to AT&T and Citigroup, many of the biggest acquirers of the 1990's are dumping business.  Tyco is planning to split into four seperately traded companies after spending $50 billion of acquisitions in the past few years. Merck has also announced plans to sell of its Medco prescription-drug business, which it bought in 1993 for $6.6 billion.  AT&T agreed to sell most of its cable business, that was built through acquistions totaling more than $100 billion during the late '90's.

Citigroup plans to sell parts of its Travelers insurance business , which merged with Citicorp in 1998 to form the financial-services giant.  Citigroup's chief executive, Sanford I. Weill, said the deal was "about cross marketing and providing better services to its clients."  The parts that they are selling off were not as profitable as the other units, so this move will increase profitability in the long run.back to top
 

11. Tan, Kopin.  "Options Volatility Rises Further on Renewal Of Worries Concerning Accounting Practices," Wall Street Journal, January 29, 2002: C11.

There seems to be fear in the options market as accounting principles scare investors.  One thing that especially scares investors is Tyco International spending $8 billion in the past three years on 700 undisclosed acquisitions. The Chicago Board Options Exchange'smarket volatility index, or VIX, jumped 17.4% to 26.85. Ciena's March 7.50 puts were the most heavily traded puts at the CBOE, as 43,140 contracts changed hands late in the season. 

As financial stocks slipped over concerns about banks exposure to weakening companies, many investors are looking for options for downside protection of their stock.  Investors have been buying protective puts in financial names from Bank of America to J.P. Morgan Chase.  Investors are focusing on buying at-the-money or out-of-the-money puts that expire in February and March.

On the other hand at least one institutional investor took a cautious stance, buying thousands of Citigroup's March 47.50 calls, which gain in value if stock price rises.back to top
 

12. Hechinger, John and Carrick Mollenkamp.  "J.P. Morgan, Others Have $14.4 billion exposure to Tyco," Wall Street Journal, February 14, 2002: A8.

During the week of February 4, 2002, Tyco, the industrial and financial services conglomerate, upset investors when it borrowed $14.4 billion from U.S. and foreign banks under backup lines of credit.  The bank that extended the most was J.P. Morgan Chase and Co., who has extended an estimated $700 million to $1 billion. Bank of America Corp., Citigroup Inc.'s Citibankunit and Commerzbank AG each extended $275 million.

Banks such as Citbank like providing credit lines because they are rarely used.  They generate fees and can lead to investment banking business.  However, Analysts say that Tyco's borrowing illustrates huge off-balance-sheet contingent liabilities that heighten bank risks in a recession.  A good example is Enron, who tapped multibillion-dollar credit lines before filing for bankruptcy, therefore exposing lenders to huge losses.back to top

Listen to NPR radio on Citibank's possible money laundering in 1999.