Why Citigroup Inc. (C) Was Up This Week: Wells Fargo & Co (WFC), JPMorgan Chase & Co. (JPM)

Corbat shows his hand, and investors like what they see
As mentioned above, Citi came out of the financial crisis hit very hard and is still dealing with its toxic-mortgage hangover. Citi even has a “bad bank” that holds much this debt. For it to start showering shareholders with capital returns — the first year it performed so strongly on the CCAR — would not only look bad, but would likely be bad.

What good is a bank that pays a great dividend or buys back shares galore if its teetering on the edge of insolvency? I give Citi CEO Michael Corbat great credit for this daring move. There was no guarantee that shareholders wouldn’t be very angry, and punish Corbat by sending the bank’s share price plummeting.

The fact that they didn’t, and that they instead sent the share price significantly up, is a testament to their patience and understanding of Citi’s real needs as much as Corbat’s.

I’m not currently a shareholder in Citi. Since the financial crisis, I thought the superbank — along with B of A — was just too much of a black hole to risk any of my own money in. And I also haven’t known quite what to make out of Corbat. He certainly looks every inch the conservative banker — even more so than JPMorgan CEO Jamie Dimon — but I didn’t feel like he’d shown his hand yet.

With this move to sit still for a year — to further strengthen and solidify gains the bank has made since the crash — I think Corbat has shown his hand, and it’s a strong one. Judging by this week’s share-price performance, I’d say most investors agree.

The article Why Citigroup Was Up This Week originally appeared on Fool.com and is written by John Grgurich.

Fool contributor John Grgurich owns shares of Goldman Sachs and JPMorgan Chase. Follow John’s dispatches from the bleeding heart of capitalism on Twitter @TMFGrgurich. The Motley Fool recommends Goldman Sachs and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo.

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