Citigroup Inc. (C): Will This Big Bank Be Embarrassed Again?

The results set to be released tomorrow are based on how the institution would fare under the adverse scenario based on its current capital deployment plan, which for Citi is a $0.01 quarterly dividend. While investors will surely use these stress tests results as a measurement of the bank since last year, forward-looking shareholders will undoubtedly be placing a greater emphasis on the Fed’s release of the Comprehensive Capital Analysis and Review (CCAR) results next Thursday, March 14.

Stay the course, Michael
Banks’ submissions for the CCAR incorporated planned strategies to return capital to shareholders. As a forward-looking mechanism, the market responds to future strategy changes. Michael Corbat is undoubtedly eager to leave his mark on the company that he has called home for three decades. However, a rejected capital plan could be disastrous for Citi’s reputation and share price, which has already advanced over 12% in 2013. Based on experience from previous stress tests and the recent shake-up of upper management, investors may be justified in supporting Citi’s decision if management chooses not to drastically increase the dividend or initiate any share buybacks.

The article Will This Big Bank Be Embarrassed Again? originally appeared on Fool.com.

David Hanson has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. It owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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