Citigroup Inc deal: Buying WB banking looks very solid
According to analysts at Merrill Lynch (stock ticker: MER), the announced deal that Citi will acquire Wachovia´s banking businesses should be very favourable. Nevertheless, Wachovia (WB) will wait for Citi´s shareholders to vote in favour of this arrangement.
Citi (stock quote: C) will immediately become the third branch banking player in the US and the largest US depositary, since it would have $1,2 trillion of deposits, versus $0,9 trillion of JPM (JP Morgan Chase).
Financial companies have suffered big volatility lately; today, US stocks jumped the most in six years as growing expectations that lawmakers will salvage a $700 billion bank-rescue package helped the Standard & Poor’s 500 Index recover more than half of yesterday’s 8.8 percent plunge.
As for Citi, the 3 month graph stated below clearly remarks the high volatility involved at this stock; the stimulus package combined with the possible WB acquisition has helped Citi to rally more than 50% in less than a week.
For this reason, we believe that Citi will suffer a profit taking next week, but in the middle term we see big upside for this company that has a new catalyst to expand.
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Posted under US Stocks
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