Citigroup: Strong profit signals turnaround
Citigroup, the beleaguered banking giant, reported a surprising $4.4 billion first-quarter profit, said Eric Dash in The New York Times. The earnings “handily beat analyst expectations” and were a sharp improvement over the year-earlier quarter, when “some extraordinary accounting adjustments” helped Citi earn $1.6 billion. Improved performance in the bank’s loan portfolio boosted the current quarter’s results, with fewer credit card customers falling behind on their payments, although “there was less improvement in the domestic mortgage portfolio.” Citi also cut losses from its mountain of toxic debt.
Citi appears to house two different banks under one roof, said David Weidner in Marketwatch.com. Consumer banking contributed more than $1 billion to Citi’s profit total, while trading profits fell to $3.2 billion from $6.1 billion. Although other banks have earned more impressive profits from trading, “this isn’t necessarily bad news for Citigroup.” CEO Vikram Pandit has made limiting risk a “top priority,” and “strong, stable results in retail banking,” coupled with a diminished reliance on trading profits, “suggest Citi made great strides during the quarter.”
Car safety: Toyota halts Lexus SUV sales
Toyota has launched a global recall of its Lexus unit’s GS 460 SUV, after Consumer Reports “issued a rare ‘don’t buy’ recommendation” for the vehicle, said Kate Linebaugh in The Wall Street Journal. The consumer publication’s auto testers found that the vehicle fishtailed under hard steering, creating a risk of “a serious rollover accident.” The recall, coming in the wake of several other recalls and a record $16.4 million fine levied by the U.S. Transportation Department, could further undermine the company’s reputation for safety.
Legal affairs: Rattner’s firm settles charges
Quadrangle Group has paid $12 million to the Securities and Exchange Commission and the state of New York to settle charges that it paid kickbacks, said Ben Rooney in CNNmoney.com. The private-equity firm, once headed by former Obama administration “car czar” Steven Rattner, allegedly bribed pension fund officials to win the fund’s investment-management business. Rattner, who no longer works for Quadrangle, is not covered by the settlement, and Quadrangle has pointedly distanced itself from what it called Rattner’s “inappropriate, wrong, and unethical” conduct. Rattner had no comment.
Retailing: Best Buy to sell electric cars
Electronics retailer Best Buy is in advanced talks with several auto manufacturers about selling their electric cars, said Andria Cheng in Marketwatch.com. Best Buy sees electric vehicles as a natural extension of its existing lines of merchandise. “Electric cars are basically computers on wheels,” said Leo Raudys, the company’s senior environmental-affairs director.
Foreign trade: Investigators swarm over HP
The U.S. Justice Department has joined a Russian and German investigation of Hewlett-Packard, said David Crawford and Dionne Searcey in The Wall Street Journal. The computer company is suspected of bribing Russian officials to win a $47 million computer contract. German officials believe that HP executives may have routed $10.9 million in bribes through a complex network of middlemen and shell companies. HP said it’s “fully cooperating” with U.S. and European authorities.