Citigroup Chafes Under U.S. Overseers

By MONICA LANGLEY and DAVID ENRICH

In a recent phone call with a senior government official, Citigroup Inc. Chief Executive Vikram Pandit revealed who's on top in the new world of American finance.

"Don't give up on us," Mr. Pandit said, pleading with the official not to push out top management. "Give us a chance to execute."

Mr. Pandit is on the verge of ceding yet more control to the government. Citigroup is in talks with federal officials about the U.S. taking greater ownership of the bank by converting its 7.8% stake of preferred shares to as much as 40% of Citigroup's common stock. Doing so would give the wobbling bank a desperately needed boost to its capital, but less control of its destiny.

Citigroup's request could also heighten political pressure to break up the financial titan, whose 1998 creation helped to dismantle the Depression-era law separating the banking and brokerage industries. For taxpayers, Citigroup's quest carries peril, because holders of common shares have the last claim to repayment in the event of a corporate liquidation.

Interviews with more than 30 banking-industry executives, regulators, government officials and others show that the U.S.-Citigroup relationship, one of the most important products of the American financial-system bailout, is off to a very rocky start.

Citigroup executives are attempting to strike a seemingly impossible balance: Run the business in a way that will please their new federal masters, but also help the bank rebound from $28 billion in losses over the past five quarters.

Former federal officials have dubbed Citigroup the "Death Star," comparing the bank's threat to the financial system with the planet-destroying super weapon in the "Star Wars" movies. Privately, in the words of one official, they regard the banking giant as "unmanageable."

Complicating the issue is the government's back-and-forth between bouts of micromanaging the banking giant and periods of ignoring it. In trying to be neither an active nor a passive investor, the U.S. is directing the business without a firm strategy or particular expertise.

Government and the Citi

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Vikram Pandit, CEO of Citigroup, testifies on the TARP funds before the House Financial Services Committee at the US Capitol in Washington, DC.

Central to the confusion: There's no one individual or entity in charge of the federal oversight of Citigroup.

That's because banks like Citigroup are regulated by a patchwork of agencies including the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. The Treasury Department also has oversight because it's the one that is injecting government capital into the banks. And members of Congress, who initially approved all that money, have their own stake in how things play out. All these interested parties have been handing Citigroup a jumble of sometimes conflicting orders, advice and critiques.

Officials with the Fed, for instance, informed Citigroup executives they have "observer rights" that entitle them to participate in the bank's board meetings. Though the government hasn't joined in so far, the fact that it might has led some Citigroup executives to complain privately that the U.S. now has "unlimited power" over the bank. One person close to the company compared the government's role to the sword of Damocles, an ever-present evil hanging over their heads.

A Citigroup spokeswoman said: "It has always been the case that when regulators ask to make a presentation to our board, we accommodate them."

On Tuesday, Mr. Pandit was in Washington for meetings with federal regulators and other officials, as questions loomed about his future and that of the company's board. Citigroup bankers sought to calm nervous clients this week. Some are worried about losing business during the uncertainty.

The federal government's new role in American finance has been staggering. In the past six months, the U.S. has injected nearly $200 billion into 419 banking institutions; guaranteed at least $420 billion in potential losses at multiple banks; directed several financial firms to merge; and has outlined plans to buy hundreds of billions of dollars in bad mortgages and other bad assets from banks. The U.S. also has agreed to prop up the commercial-paper market by buying more than $1 trillion of companies' short-term debt.

Overhaul of Bailout

Besides the Citigroup move, the government's latest to-do list includes an overhaul of its $150 billion bailout of American International Group Inc. Starting this week, banking regulators will conduct "stress tests" to gauge the health of the nation's top 20 banks. And in the coming weeks, the government plans to orchestrate a restructuring of the nation's auto industry, after loaning a total of $17.4 billion to General Motors Corp. and Chrysler LLC, both of which are now seeking billions more.

Citigroup's bid for yet more help is sure to complicate a partnership already strained by miscommunications and missteps. Since the government shored up the embattled bank with fresh capital over the past few months, it has issued some broad directives: ordering Citigroup to sell assets to raise money and curtail risky investments, urging a reshuffle of its board, and warning that if it needs more taxpayer money, management may be booted.

But even as the government has ensured Citigroup's survival for now, bank executives say they have been left to read tea leaves about how to implement federal directives.

U.S. officials say Citigroup's problems are wide-ranging, presenting issues for various governmental agencies -- all of which are also engaged in handling problems involving other banks and the economy. Some officials say they have given Citigroup executives broad outlines of what they'd like the company to do. They say thus far it's not been the government's position to give Citigroup a specific playbook about how to put directives in place. The current talks for federal assistance, however, could result in more direct orders on how Citigroup should proceed.

Regarding the government's relationship with Citigroup, a company spokeswoman said in a statement: "We maintain constant and open communication with all of our regulators."

In recent weeks, Citigroup executives have reached out to various government officials for guidance -- with little to show for their effort. Last week, Mr. Pandit met with Lawrence Summers, the government's chief economic adviser, in the White House's West Wing. Mr. Summers made clear that he wouldn't discuss Citigroup specifically, and Mr. Pandit emerged from the meeting with no better idea of where the Obama administration stands in managing ties with the big bank.

Amid the anxiety, Edward Kelly, a senior investment banker and one of Mr. Pandit's closest confidants, used his personal misfortune to ease tension within Citigroup. After a trying visit to Washington to brief regulators, Mr. Kelly returned to his Baltimore home tired -- and soon woke up to a screeching smoke alarm. Finding flames in his home office and working to halt the fire from spreading, Mr. Kelly burned his right hand and arm so badly that doctors kept him home for several days to prevent infection.

In a flurry of phone calls while he was home recuperating, Mr. Kelly joked to colleagues that he was putting out fires at both his home and his company.

Spotty Communications

Communications from government officials, meanwhile, have been spotty. Friday afternoon, after the bank's shares had closed the week at an 18-year low of $1.95, top executives reached out to the Office of the Comptroller of the Currency and the New York Fed. They wanted to discuss Citigroup's proposal to substantially enlarge the government's ownership stake. The conversations were constructive, but they couldn't progress much until they heard from Treasury, the government arm that had invested in Citigroup's preferred stock and therefore would need to bless converting that stake into common shares.

Through the weekend, Citigroup didn't hear from Treasury officials. Then on Sunday evening, Mr. Pandit's phone rang. It was Treasury Secretary Timothy Geithner, calling with a message: "I think we just need to do something." Mr. Geithner was short on specifics, but said he was ready to entertain Citigroup's idea of converting a big chunk of the government's preferred stock into common shares.

The government's ongoing pressure to slim down the company has forced Citigroup executives to consider a range of unwanted options. They agreed in January to spin off the Smith Barney brokerage unit into a joint venture with Morgan Stanley after insisting for years that they wouldn't part with the business. The bank has also split itself into two parts, with the goal of selling additional assets and businesses.

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Citigroup investment banker Edward Kelly

Executives are now wrestling with the possibility of shedding the company's lucrative Banamex consumer-banking unit in Mexico, even as Citigroup officially insists that is unlikely to happen. Following his meeting with Mr. Summers last week, Mr. Pandit flew to Mexico City, trying to calm Banamex employees who were convinced that the U.S. government would force Citigroup to sell the business.

Citigroup's every move is now under the public microscope. In late January, as news was about to break about Citigroup's plans to buy a $42 million corporate jet, Mr. Pandit huddled with Citigroup executives in the firm's Manhattan headquarters. Mr. Pandit suggested the company simply cancel the order to minimize the bad publicity.

Lewis Kaden, a Citigroup vice chairman, resisted, arguing that the company needed to carefully word any public statement about the jet in order to avoid a fee from the plane's manufacturer. An internal debate ensued over how best to handle the matter, and the lack of a resolution transformed it into a politically potent multiday news story.

Federal officials were apoplectic. President Barack Obama branded Citigroup's plans to buy the plane "outrageous." Treasury officials phoned Citigroup executives and pressured them to scrap the order, which they did.

The tongue-lashing didn't stop there. Mr. Pandit received an earful from Rep. Nydia Velazquez (D., N.Y.). At a meeting in her Manhattan office, Rep. Velazquez scolded Mr. Pandit for not canceling the jet order sooner and suggested that he fire the Citigroup public-relations team for "bungling" the situation. Rep. Velazquez couldn't be reached for comment.

Sen. Charles Schumer (D., N.Y.) also met with Mr. Pandit after the plane debacle. "The dynamics are changing," he told Mr. Pandit. "Brace yourself for more accountability and stricter oversight. No more big executive pay, no more frills."

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Treasury Secretary Timothy Geithner

The scrutiny has Citigroup executives second-guessing everything, right down to the fresh-baked cookies offered at a recent corporate retreat in Armonk, N.Y. Seated in plush chairs around a three-story stone fireplace, some attendees wondered aloud if the cookies themselves might be portrayed as a frivolous use of taxpayer money.

In the wake of the airplane flap, federal regulators have begun demanding more detailed information from Citigroup about corporate expenses and individual departments' operating budgets. The government is specifically requesting information about expenses for any lavish parties or other corporate events.

The detailed nature of such requests startled some Citigroup executives, who weren't expecting to fork over such granular information. The company has responded by preemptively canceling several events, including a private-investor conference in Miami slated for April, where hotel rooms for hundreds of people were already reserved. A few groups of Citigroup bankers had planned to take top clients on ski trips in the Rocky Mountains; those plans were shelved. At the Inter-American Development Bank's annual conference, scheduled for March in Colombia, Citigroup won't be hosting its normal after-hours parties.

Citigroup officials are learning the hard way to play politics. Anticipating the political storm he would incite by flying to the nation's capital by private plane, Mr. Pandit now hops on commercial shuttle flights for the frequent trips to Washington. Other executives travel by Amtrak train.

Amid pressure to shake up its board, Citigroup initially suggested it would begin making director changes at the April shareholder meeting. The Fed rejected that, pushing lead director Richard Parsons to act sooner. The Fed has also frowned upon some potential nominees that Citigroup has informally pitched to the agency, saying Washington would prefer "tough-minded independent thinkers."

Though the company has lined up director candidates that it wants the Fed to approve, the candidates haven't agreed to the posts, waiting to see what happens to Citigroup's management, operations and future.

Citigroup's guessing game also extended to congressional hearings held earlier this month. Legislators pounded Mr. Pandit and other bank executives for putting their institutions in jeopardy. As Mr. Pandit prepared for the hearings, some Citigroup executives urged him to make two concessions: apologizing for the corporate-jet fiasco and agreeing not to get paid until Citigroup returns to profitability. Others argued that such conciliatory gestures would validate unfair criticisms of the company. Mr. Pandit ultimately made both concessions at the hearing.

Thawing Markets

Meantime, Citigroup has to stop the financial bleeding. Mr. Pandit last month told senior executives that the first quarter is essentially do-or-die: Citigroup needs to turn a profit to persuade the government and investors that it's viable.

Last week, Citigroup officials privately told regulators it had a profitable January. Credit and stock markets thawed that month, benefiting banks across the industry. "We've got to prove that our core business can make money," Mr. Pandit recently told top aides.

With the economy in a tailspin, some executives privately voiced skepticism that Mr. Pandit's goal of a profitable first quarter would be attainable. The Fed recently barred Citigroup from making acquisitions and reinforced restrictions on the bank's use of capital.

In a recent meeting with investment bankers, Citigroup's investment-banking chief, John Havens, was pushing his deputies to further streamline operations in order to reduce costs. One executive asked whether the changes needed to be made quickly. The question "is typical Citi," Mr. Havens replied, suggesting that decisions at the company take too long, according to a person at the meeting. "That's why Geithner is so intolerant with us these days," Mr. Havens told the bankers.

Now, gallows humor is setting in. This week, some employees noted that they always thought that working for Citigroup -- with its unwieldy bureaucracy and clashing fiefdoms -- was like working for the government anyway.

Write to Monica Langley at monica.langley@wsj.com and David Enrich at david.enrich@wsj.com

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US stimulus plan just a repeat of past mistakes

US stimulus plan just a repeat of past mistakes

By R SIVANITHY

FORMER British prime minister Winston Churchill once famously said: 'Those who fail to learn from history are doomed to repeat it.'

In trying to repair the damage wrought on the US economy by the sub-prime crisis, the American authorities may end up doing more long-term damage than good because they seem bent on following the same steps taken by their predecessors in the hope that they can engineer a quick return to how things were before the crisis erupted.

Unfortunately, there is plenty of reason to believe that the present US stimulus package could well turn out to be a disastrous mistake.

Although opinions are divided on how best to mend the US economy, there seems to be general agreement over the need to 'fix the financial markets' in order to 'get credit flowing', which will then 'kick-start the economy', as if one follows the other in logical fashion.

But should credit drive the economy, or should the economy drive credit?

In a properly functioning system, credit/money should be viewed as any other product of that economy - a commodity that has prices determined by supply and demand.

Those prices, or interest rates, are set by market forces with minimal intervention from central banks. If economic activity is robust, there will be sufficient competition for credit, which should then ensure money is channelled to its best possible uses.

The present crisis was almost a decade in the making and was founded almost entirely on easy, artificial and non-market-determined credit. It started when former Fed chairman Alan Greenspan slashed interest rates 12 times between 2000 and 2002 to near-zero to try and pump-prime America out of the dotcom recession, and it gained unstoppable momentum when the resultant lax lending then inflated a huge debt bubble whose most visible manifestation was in the property market.

This then attracted millions of low-income or sub-prime borrowers who technically did not qualify for loans but were granted them anyway because they either lied about their finances or got their bankers to lie on their behalf in order to speculate in property.

The collapse in sub-prime debt, however, was only the tip of the iceberg. According to the US Federal Reserve, total US consumer debt, which includes credit card and non-credit card debt but not mortgage debt, reached US$2.55 trillion at the end of 2007 (2008's figures are not available yet).

Savings on the other hand, are poor; in 2006, the average savings rate fell into negative territory for the first time in almost 70 years and although it has now improved slightly, in 2009 is estimated to be no more than 3-5 per cent of income - less than half the 10 per cent level it was in the 1980s.

In short, the American consumer is hugely reliant on debt but has virtually no savings.

Crucially, it is this that is the crux of the problem and arguably not the crashing real estate market; the fall in property prices only precipitated the crisis but it is massive indebtedness with no savings backup that lies at the root of the present US economic mess.

This conclusion is not new. US fund manager Robert Albertson in the Feb 16 issue of US newspaper Barron's spoke about the need for a savings, not stimulus, plan; economics professor Ravi Batra in his 2005 book, Greenspan's Fraud, warned about an impending worldwide collapse from America's over-reliance on debt; while in December 2007, Morgan Stanley's Stephen Roach said that the Fed needs to rethink its 'reckless, bubble-prone policy' and that the only hope of breaking the endless but lethal chain of inflating bubbles is by raising, not lowering, interest rates.

All of these warnings have fallen on deaf ears and instead of addressing the fundamental problem, which is the over-reliance on debt - at the very least by coming up with ways of encouraging people to save and reduce their reliance on borrowed money - the present approach seeks to get people borrowing and spending again, on the assumption that borrowing/lending leads to increased economic activity, when in reality it should be the other way around.

Standard prescription

The fundamental problem is that in the hands of officialdom everywhere (not just the US), monetary and fiscal policies are simply euphemisms for debt creation. So when a crisis strikes, the policy responses always follow the same, standard prescription: cut interest rates and keep cutting until they get to zero; print money; slash taxes; get credit flowing; put money in the pockets of the public so as to get the consumer spending again - pretty much what the present US stimulus plan aims for.

Never mind that it hasn't worked in Japan for many years and never mind that it hasn't worked yet in the US, because eventually if you throw enough money at the economy, things must surely pick up.

The problem is that even if there is a recovery later this year, it might only be a short-term, artificially inflated blip that could very well taper off quickly to be followed by an even worse downturn.

You'd have to wonder if investors know this and are very worried - Wall Street dived immediately after the stimulus package was announced and is now almost 20 per cent down since the beginning of the year.

We believe that all accepted wisdoms have to be jettisoned in favour of different, out-of-the-box solutions.

It might be that interest rates and corporate taxes have to be raised instead of lowered. Perhaps a vast, long-term plan installed to reduce the multi-trillion-dollar deficits and wean everyone off the over-reliance on credit.

Whatever the case, the US should get back to the idea of the economy driving credit, not the other way around. For the measures as they stand are nothing more than plastering over the cracks - they have been used before and failed to yield results. To continue on the same path dooms the US to fail again.

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Leading Exchanges by Market value:

  Leading exchanges by market value: 
                                Market value  Pct change  2009 
                                 ($ billion)  last 6 mth   P/E 
  1. CME Group <CME.O>                11.58     -53.1     10.6 
  2. Hong Kong <0388.HK>               9.07     -34.8     17.6 
  3. Deutsche Boerse <DB1Gn.DE>        8.80     -45.9      7.7 
  4. Bovespa (Brazil) <BVMF3.SA>       5.40     -25.0     13.0 
  5. NYSE Euronext <NYX.N>             4.39     -55.8      7.2 
  6. Nasdaq OMX Group <NDAQ.O>         4.01     -37.0     10.1 
  7. Intercontinental Exchange <ICE.N> 3.91     -27.8     10.8 
  8. Singapore Exchange <SGXL.SI>      3.36     -28.6     15.6 
  9. DFM (Dubai) <DFM.DU>              3.20     -57.8     13.4 
 10. ASX (Australia) <ASX.AX>          2.93     -18.8     14.7 
 11. TSX Group (Toronto) <X.TO>        1.82      -2.9     10.6 
 12. London Stock Exchange <LSE.L>     1.69     -52.3      7.2 
 13. BME (Spain) <BME.MC>              1.60     -22.4      8.6 
 14. Osaka Securities Exch <8697.OJ>   0.96      -7.6     13.1 
 15. Bursa Malaysia <BMYS.KL>          0.72     -22.3     28.5 
 16. Bolsa Mexicana <BOLSAA.MX>        0.37      -2.9     10.0 
 17. Hellenic Exch (Athens) <EXCr.AT>  0.35     -51.6      7.6 
 18. Johannesburg Stock Exch <JSEJ.J>  0.33     -22.6     10.0 
    Source: Reuters data 

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China warns slowdown could worsen, does not rule out rate cut

China's central bank warned the country's economic slowdown could worsen and the risk of deflation was high, in its latest quarterly report, while not ruling out further interest rate cuts. China's economy will continue "stable and rapid growth" as government stimulus measures kick in but the global economic crisis has hit hard, the People's Bank of China said in its fourth quarter monetary policy report. "(We will) appropriately use various tools, including adjustment of interest rates and banks' reserve requirement ratios, to ensure reasonable monetary and credit growth," the bank said. China cut interest rates five times in the period from September to December, with the benchmark one-year lending rate now standing at 5.31 percent, while the one-year deposit rate is 2.25 percent. The export-dependent Chinese economy , the world's third-largest, expanded by nine percent last year, the first time in six years that it posted single-digit growth. "External demand is shrinking, some sectors have overcapacity, enterprises face operating difficulties and urban unemployment is rising, while the downward pressure on economic growth is increasing," the central bank said. Weak demand means deflation is likely in the short term, but in the medium-to-long term massive injections of liquidity by central banks around the world could fan inflation, it said in the report released late Monday. China's consumer price index, the main gauge of inflation, was up only 1.0 percent in January while producer prices, which measure trends at the wholesale level, fell 3.3 percent, prompting economists to warn deflation was imminent. Deflation is a situation when a continued fall in prices encourages people to postpone buying products as they expect to get a better bargain later, but that in turn only serves to further slow the economy.

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CITIGROUP

SINGAPORE, Feb 23 (Reuters) - Citigroup <C.N> is in talks with federal officials which could see the U.S. government holding as much as 40 percent of the struggling lender's common stock, the Wall Street Journal reported on its website. Citigroup executives are hoping the talks with U.S. federal officials will result in a stake closer to 25 percent, the Journal reported, citing sources familiar with the talks. The report comes amid heavy selling of U.S. bank shares last week on fears the U.S. government may be forced to nationalise some ailing banks to stave off further damage to the economy. For story, click here [ID:nHKG310337] Below are analysts' comments on the report. *********************************************************** KU YONG-UK, ANALYST, DAEWOO SECURITIES, SEOUL: "For the government to take on a stake in a bank would mean the government itself would like to resolve fundamental problems at the bank. "But that may precede a capital writedown. We need more details on what the government will mark as losses for Citi before it buys a stake." SEAN CALLOW, CURRENCY STRATEGIST AT WESTPAC IN SYDNEY "(The report) is definitely drawing much interest, supporting S&P futures and also Asian FX. "It seems markets are taking the story on face value and pricing in the U.S. government not fully nationalising banks. Whether that ends up proving to be the case is very debatable, but for now it is helping broad risk appetite and thus weighing on dollar/Asia FX, pushing Treasury yields higher." ALEX WONG, DIRECTOR WITH AMPLE FINANCE IN HONG KONG "The news itself is hardly positive, if anything it is indicative of further weakness in the financial markets going forward, but at least now investors know the extent of the damage that will be done in terms of equity dilution." STEPHEN ROBERTS, ECONOMIST AT NOMURA, SYDNEY "This still maintains a high degree of uncertainty regarding the financial rescue package from the United States. It is reasonable enough to expect markets to remain volatile and my suspicion is the rise in risk appetite that we are seeing now could peter out in the U.S. session as it will not be taken very positively." TONY MORRISS, SENIOR MARKETS STRATEGIST, ANZ INVESTMENT BANK, SYDNEY "It's a sign of relief that the move at least removes some of the uncertainty around the banking sector. It confirms that markets have the greatest sensitivity to uncertainty in the banking sector. They are certainly moving much faster this time and it can be taken as a commitment that some banks are too big to fail and the economic consequences too bad to contemplate. "Now we need further clarity on the criteria they will use to stress test the banks. Nationalisation is still possible. If you continue to see pressures on lending, they will have to take more measures down the road." SHARADA SELVANATHAN, CURRENCY STRATEGIST AT BNP PARABAS, HONG KONG: "The possibility of nationalising a major U.S. bank turns away private capital flows, and this needs to be seen in the context of Asia's pool of liquidity that funds the U.S. current account deficit. "Asian investors would hence raise questions with regards to how the United States will be able to fund its deficit in the medium to long term, hence we could see an extension of the euro/dollar rally this morning. "But I don't think this is the turnaround for the dollar. Remember that when a bank gets nationalised, it will be forced to handle business in a more domestically oriented manner; this would mean that the nationalised bank would have to pare back its business offshore. Repatriation flows would prove to be dollar positive. "Thus I would allow for the euro/dollar rally to extend until the 1.3070 level and then sell into euro/dollar strength." YASUTOSHI NAGAI, SENIOR ECONOMIST, DAIWA SECURITIES SMBC IN TOKYO "The media report that the U.S. government may inject capital into Citigroup has sparked unwinding of flight-to-quality buying on U.S. Treasuries. If the government really takes such a step, it would help Citi tackle its problems, thus it is a negative factor for Treasuries. "The dollar was sold against the euro, also on a reverse of flight-to-quality buying of the U.S. currency. "The U.S. government is very fast in taking necessary measures to fight the financial crisis. The United States could be the first to arise from the crisis before Europe and Japan, so I think the dollar will be on a rising trend against other major currencies." SAILESH JHA, SENIOR REGIONAL ECONOMIST, BARCLAYS CAPITAL SINGAPORE: "This gives you the sense that authorities' worries have intensified that problems relating to the U.S. economy may potentially spill over to the rest of the world. "We have lowered our U.S. economy growth forecasts for 2009." "In Europe, the banking sector problems have started to intensify as well. You have seen the problem in Eastern Europe relating to Hungarian banks having contagion to developed country banks in Europe as well. "There are risks that you will get continued government involvement in the financial sector in Europe as well." DARIUSZ KOWALCZYK, CHIEF INVESTMENT STRATEGIST, SJS MARKETS, HONG KONG "Longer term, it is necessary for the government to recapitalise banks, and if they put in more capital, then obviously their ownership has to increase. I think 40 percent may not be the end of it." "Until most of the news is known, there will be a lot of volatility and probably a downward trend in the equity market because we don't know how much pain for investors government measures will induce, by which I mean, will current holders of bank equity lose everything, or most?" "What I don't like is this kind of creeping mode of announcing this sort of news. It would be best if a sort of full-fledged plan could be announced in detail in one go. Then the market could fall, the air would be cleared, and it could start rising again." MARKET REACTION U.S. equity futures turned positive, and Treasuries fell after the report, while the euro <EUR=> jumped to the day's highs against the dollar and the yen. Asia stocks also rose. * S&P 500 futures <.GSPC> were up 0.9 percent and Dow futures <DJc1> rose 0.7 percent; the MSCI index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS> rebounded from a 3-month low and was up more than 1 percent. * The benchmark 10-year Treasury yield <US10YT=RR> ticked up to 2.82 percent from 2.79 late on Friday. * The euro jumped around 1 percent to $1.2914 <EUR=>, while the dollar slid 0.5 percent to 92.98 yen <JPY=>. * For the latest news on Citi, click [C.N-RTRS-LEN] (Reporting by Asia bureaus; Editing by Kim Coghill) (Compiled by Asia Treasury Desk; +65 6870 3840) ((Reuters Messaging:kim.coghill.reuters.com@reuters.net Email: kim.coghill@thomsonreuters.com)) Keywords: CITIGROUP/

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GOLD - SPDR Dold Trust

TOKYO, Feb 20 (Reuters) - The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust <GLD>, said holdings hit a record 1,028.98 tonnes as of Feb. 19, up 4.89 tonnes or 0.5 percent from the previous day.

For details on gold holdings by the ETF listed in New York and also co-listed on other exchanges, click on:

http://www.exchangetradedgold.com/iframes/usa.php

Holdings in the trust, which issues securities backed by physical stocks of gold, began climbing again in December as worries about the economic crisis drove investors to seek the metal as a safe-haven asset. <XAUEXT-NYS-TT>.

Following are changes in SPDR holdings

Date: Total tonnes

Feb 19 1,028.98

Feb 18 1,024.09

Feb 17 1,008.80

Feb 13 985.86

Feb 12 970.57

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HYFLUX

  
    HYFLUX JUMPS ON STRONG PROFITS 
    Water treatment firm Hyflux <HYFL.SI> rose as much as 6.6 
percent on Thursday after posting a near-80 percent jump in 
annual net profit, but some analysts cut their price targets, 
citing concern over a weak industrial sector.  
    JPMorgan, which rates Hyflux as "overweight", said there was 
potential gain from its Build-Own-Transfer plants divesture, 
adding that a portfolio of 9 plants initially priced at S$180 
million ($117.5 million) was in the pipeline.  
    "The price tag could be potentially revised upwards depending 
on the state of completion and operating levels of the plants," 
JPMorgan said in a research note.   
    But JPMorgan cut its Hyflux price target to S$2.50 from 
S$3.00 previously.   
    Credit Suisse, which rates Hyflux as "outperform", reduced 
its target price to S$2.39 from S$2.52, citing industrial sector 
weakness.  
    A local dealer said Hyflux's strong revenues were impressive 
at a time of recession.  
    "The water business is not high risk, except for higher 
gearing from time to time. But Hyflux has proven itself in the 
long-run without putting too much strain on the business," he 
said.  
    By 0415 GMT, Hyflux was up 6 percent at S$1.76, outperforming 
a 1 percent drop on the benchmark Straits Times Index

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