It's not only the UK banks that are warning of increasing bad debts: in America, Citigroup, the world's biggest financial firm, said that US bankruptcies had hurt its credit card revenue. That, along with the fall in fixed-income trading, helped the group to report a decline in second-quarter profit. Net income fell some 5% year-on-year, to $5.4bn, while revenue slid 3% to $20.2bn, well below what the analysts had predicted, at around £21bn.
And now the pressure is really building on Citigroup chief executive Charles Prince, who called the environment "one of the worst we have seen in years", said Jonathan Stempel on Reuters.com. The CEO has not only been battling to hike the underperforming businesses, he has also struggled to improve Citigroup's ethics. Remember that only last year, Citigroup was charged for legal costs related to the fall of Worldcom, Enron, and a number of other corporate scandals.
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Investors may be worried by Citi's weakening profitability, but if that is accompanied by greater caution from the group as it undergoes change due to its global ethical training programme, then perhaps that's "no bad thing".
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