Citigroup, Banks | featured news

When the credit crisis struck last year, federal regulators pumped tens of billions of dollars into the nation's leading financial institutions because the banks were so big that officials feared their failure would ruin the entire financial system. Today, the biggest of those banks are even bigger.

Citigroup Inc, one of the big U.S. banks hit hardest by the financial crisis, posted a quarterly profit as gains from the sale of its Smith Barney brokerage into a joint venture more than offset losses from its primary banking businesses.

Citigroup has been negotiating with the FDIC about entering into a so-called memorandum of understanding that lets the bank work out its problems without the glare of outside attention.

Citigroup will lend up to $5 billion in TARP funds in a municipal program to help finance construction of schools, airports, hospitals and other infrastructure products.

Citigroup Inc and Bank of America Corp shares rallied in premarket trading ahead of the release of "stress test" results that will force them and other top banks to raise tens of billions of dollars in capital.

Bank of America needs $34 billion in extra cash, a source familiar with U.S. government stress tests on leading banks told Reuters, unsettling markets and stoking talk of a possible asset sale in China.

So begins the tricky process of rolling out stress test results. The dance starts with a leak to the WSJ. Word is that the Federal Reserve has told Citigroup (C) and Bank of America (BAC) that they'll both need to raise billions more in order to be adequately capitalized. Neither is a huge surprise.

The bank’s reported income of $1.6 billion was helped by an accounting adjustment that allowed a one-time gain of $2.5 billion on its derivative positions.

Citigroup Inc named Chief Financial Officer Gary Crittenden as chairman of troubled banking unit Citi Holdings on Friday, and elevated Edward Kelly to replace him as CFO.

Bank of America Corp and Citigroup Inc shares have roughly tripled from multi-decade lows set less than a month ago, and powered higher on Wednesday on speculation their recent punishing declines might have been too severe.