New York: Citigroup Inc shares fell 1.8% to $44.39 Monday morning after the company’s 1-for-10 reverse stock split.
The third-largest US bank by assets, which needed $45 billion in US government bailouts to survive the financial crisis, shrank its number of shares outstanding to about 2.9 billion with the split.
The split boosted Citigroup’s share price out of the single-digit range it has languished in since the financial crisis. The shares are trading in the mid-$40s for the first time since October 2007, when the bank started to recognize billions of dollars of losses on bad loans.
Investors see reverse splits as purely cosmetic and often do not reward companies that undertake them. A 2008 academic study also found that companies that conduct reverse splits often suffer poor market and operating performance.
Shares of the insurer American International Group Inc, a recipient of $182 billion of federal bailouts, fell in 2009 after a 1-for-20 reverse split.
Citigroup shares fell on the day in March when the bank announced its reverse split, and industry observers had forecast they would fall again on Monday.