Endgame for Citigroup?

Citigroup got hammered today (-17.3%) after it was reported that they were in talks to sell a majority stake in its Smith Barney brokerage business to Morgan Stanley. The breakdown in Citi's chart looks ugly. A retest of its November lows looks probable.




But Citibank under $6 begs the question whether this bank can survive. Reports are already starting to circulate about the break up of Citi (Marketwatch, Felix Salmon at Market Movers, Information Arbitrage). These ideas gain traction as we approach the inauguration of the Obama administration, particularly as the next administration will not be ideologically opposed to the nationalization of a bank. To quote Felix Salmon:

I'd say p=0.3 right now that Barack Obama's first major act as POTUS will be the nationalization of Citigroup. Yikes.