SBI more valuable than Citibank

"May you live in interesting times," goes an old Chinese curse. And these are interesting times for sure.

State Bank of India (SBI), the largest bank in India, is now worth more than Citigroup, one of the world's largest banks.

The market capitalisation (number of shares outstanding x the closing price of the share) of SBI on Friday closed at Rs66,285 crore. This is around 25 per cent more than the closing market capitalisation of Citigroup on the New York Stock Exchange on Friday. The market capitalisation of Citigroup was Rs52,931 crore.

The Citigroup stock fell by 22.3 per cent on Friday to close at $1.95 per share (around Rs97). This was primarily on account of fears of the US government nationalising the bank, which would wipe out the shareholders. Hence the mad rush to get out of the share. A day earlier, the market capitalisation of Citigroup stood at Rs67,944 crore, around Rs700 crore more than that of SBI.

Over the last four quarters, Citigroup has earned Rs230,485 crore as revenue, which almost eleven times more than the revenue earned by SBI.

But when it comes to profits Citigroup over the last four quarters has suffered total losses of Rs83,474 crore.

During the same time SBI has made profits of Rs8,262 crore.

And that precisely explains why SBI is now worth more than Citigroup. The market capitalisation of Citigroup has fallen by around 90 per cent in the last one year.

As the huge losses clearly tell us, the current financial crisis has hit Citigroup hard and experts now say it is a zombie bank, which is surviving primarily because of the billions of dollars of support that it has been receiving from the government.

"Citicorp is now a "zombie bank" -- its future is uncertain. I am not confident that they will be able restructure themselves and change their business model in a very challenging economic environment," saysSatyajit Das, an internationally renowned derivatives expert and the author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives.

Citi has received $45 billion (Rs2,25,000 crore) out of the troubled asset relief programme (better known as the $700billion financial bailout launched by George Bush and Henry Paulson). Other than this it has also received guarantees worth $301 billion (Rs15,05,000 crore) on its assets from the government.

Martin Hutchinson, an economic commentator, recently put out a list on the status of the 12 largest banks in the US. He categorised Citi as a zombie bank. "Citi has been a serial flirter with bankruptcy over the past 30 years and remains a basket case," he wrote.