Citigroup's difficulty in selling $20 billion of stock points to the fact that it shouldn’t have tried to sell stock in the first place, says renowned bank analyst Dick Bove of Rochdale Securities.
"It’s a terrible deal for shareholders,” he told CNBC. “Vikram Pandit (Citi’s CEO) should have never done this thing."
Citigroup executives merely want to get themselves out from under the government’s thumb to eliminate limits on their compensation, Bove maintains. The management is putting its own interests above those of shareholders.
"I put a 'sell' on this stock when I couldn't convince them not to do this deal," Bove said.
"Three weeks ago I met with the company and talked with them about not going forward with a deal of this nature. My view was that this was a terrible error."
Bove said he told Citi officials to wait two years for a share offering. "Let the earnings come back to the company. Let the business come back. Then think about getting rid of the government obligations."
Citi should be focused on business issues rather than financial issues, Bove says. “I don't want to own this stock and I would not buy it."
Bove isn’t the only expert who is bearish on Citi. "The market is not buying the Citi story right now," Alois Pirker, a research director at financial consultancy Aite Group, told Associated Press.
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