As we enter what I call a new stage in the world auditorium of central banking, financing and asset management, what does the latest round of regulations and financial interconnectedness mean? The latest G20 summit held at Cannes brought forth the result of staving off failure:

"Financial institutions whose distress or disorderly failure, because of their size,com plexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity. To avoid this outcome, authorities have all too frequently had no choice but to forestall the failure of such insitutions through public solvency support. As underscored by this crisis, this has deleterious consequences for private incentives and for public finances."

With all this collectively in mind, I thought....... which bank stands out through the storm of financial headwinds? One looks like Citi. It released it 2nd quarter earnings, with a solid bottom line figure of $2.9 billion, or $0.95 per share. While Citigroup reports consolidated financial reports, several years ago it divided itself into two companies, Citibank and Citi Holdings. Citi Holdings held the loans and other assets that Citigroup wished in 2008 it did not have. Since 2009 Citigroup has been able to segregate the good from the bad. Citi Holdings is in a liquidation mode, and quarter after quarter is a drag on overall assets. Citi Holdings had at one time 40% of Citigroup's assets. Now it is under 10%.

The core of Citigroup is performing quite well. Revenues came in during the second quarter at $18.6 billion. Over the past four quarters, it's overall reserve for losses has fallen from $34.4 to $27.6 billion. In the just concluded second quarter, there was a release of $984 million. That translate to about a third of the quarter's profit amount.

Citigroup's provision for loss was reported at $214 million from a year ago at $219 million. The consumer credit environment is improving. 

The global consumer bank has focused on emerging markets. Will the world-wide experiment work? Note that Wells Fargo and U.S. Bancorp (USB) have little or no presence outside the United States. Citigroup received 53% of its revenue from North America. The Securities and Banking unit saw 16% net income increase over last year. This was accounted for by expense reductions, mainly personnel. 

The interest in Citi is warranted since the tangible book value has climbed over $51 a share, nearly double today's stock price. Earnings are growing and Citi is a candidate for big capital gains. Their is risk with the European exposure and the LIBOR scandal. 

If you have patience and an appetite for risk, give Citigroup (C) a look. 

Disclosure: The author owns Citigroup.

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