12 Jan 2010 04:04 PM
RIYADH- Saudi billionaire Prince Alwaleed bin Talal, a top shareholder in Citigroup (C.N), said he expects the troubled U.S. bank to book a profit both this year and next, and gave a bullish outlook for his own investment firm.
Kingdom Holding Co, whose 4.2 percent stake in Citi is its most prized asset, has overcome the worst of the crisis and was set to close 2009 with a profit after an $ 8 billion loss in 2008, he said on Monday in a rare interview.
Sitting on the 66th floor of his Kingdom Tower in the Saudi capital, the royal hammered home a positive message about the recovery of both Citi and Kingdom Holding after unveiling a surprise capital decrease last week for the investment vehicle.
"The turnaround for Citi now is already happening. The shares are up right now so the worst is over," Alwaleed told Reuters.
"In 2010, I'm looking for stabilization and profitability also. I'm expecting 2010 to be profitable for Citi," he said. "We are looking for positive results (also) in ... 2011 for Citi, which will reflect automatically on the results of Kingdom Holding."
Surrounded by female assistants dressed mostly in power suits and shirts -- a far cry from the top-to-toe black robe the conservative kingdom's women wear in public -- the prince said he hoped the first quarter of 2010 would be profitable for Citi too.
In New York, Citigroup spokesman Jon Diat declined to comment.
Prince Alwaleed declined to say whether he would keep his shares in Citi no matter what happens to the bank. At 1638 GMT the bank's stock was trading up 1.4 percent at $3.64.
His first investment in Citi was during troubled times: He injected $590 million into the bank in 1991. Alwaleed told Fortune magazine in 2007 that the price he paid in 1991 for Citi shares was $2.75 each taking into account subsequent share splits.
The investment has played a big role in raising both his personal profile among hundreds of third-generation Saudi princes who are grooming themselves for greater influence in domestic politics and that of Kingdom Holding, which started off as a consulting business.
Asked by Reuters to give a scoop, he said: "You want a scoop? The scoop is sitting with me alone."
BULLISH VIEWS
Prince Alwaleed agreed to an interview following a news conference to counter what he called negative analyst views following the $6.92 billion capital reduction.
"Kingdom Holding stayed profitable in the fourth quarter of 2009," Alwaleed said, after analysts suggested the capital reduction scheme could be aimed at cushioning losses in the fourth quarter of 2009 that could be larger than the $8.3 billion the firm made a year earlier.
"Analysts are human beings, they can get things wrong. You cannot say that losses this year (2009) will be bigger than last year (2008), because it will mean that Kingdom (Holding) will shut down. Bye-bye," he said.
The capital decrease would indeed help Kingdom Holding, in which he owns 95 percent, to get rid of all accumulated losses caused by the global turmoil. Accumulated losses stood at $7.8 billion by end-September.
"We have had a profit in the previous (three) quarters of 2009, I expect us to keep on this trend (in the fourth quarter of 2009)," Prince Alwaleed said.
The company closed 2008 with a net loss close to $8 billion after making the fourth-quarter net loss of $8.3 billion.
Prince Alwaleed said the free-of-charge injection from his own pocket of 180 million Citi shares into Kingdom's balance sheet would reduce the average cost of shares in the bank held by the firm before and which stood at about 3.6 percent of Citi's capital, according the Kingdom's listing prospectus.
"It's wrong to say that (I) raised Kingdom Holding's exposure to Citi. If they bought them from the market for money then yes but they did it for free .. If you buy something for free you don't increase your exposure ... It's a no-brainer".
Analysts have said the two moves indicated that the nephew of Saudi King Abdullah wants to stick by his repeated pledges not to sell his Citi shares, but also that he does not expect the shares to recover quickly.
"The company can now borrow against that (the 180 million Citi shares) 70 percent of their value ... It's good for the company. The Capital Market Authority (Saudi bourse watchdog) loves this," Prince Alwaleed said.
Asked how Kingdom Holding managed to move from a large net loss in the fourth quarter of 2008 to a net profit in the first three quarters of 2009, Prince Alwaleed said: "We are smart people".
He said the holding was in talks to buy into four "global" firms, and that "we are going to make an announcement to make a big investment in Africa." He declined to elaborate.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment