Recessions in the euro area, the U.K. and Japan are features of the Fed’s 'severely adverse' scenario in the new test. The main difference from last year is a more substantial slowdown in Asia, including 'a sizable weakening of economic activity in China', the Fed said yesterday in a statement.
Bloomberg reports that Citigroup employs thousands of people across Asia. Former Chief Executive Officer Vikram Pandit, originally from Nagpur, India, pushed into markets across the continent, making credit-card, personal and corporate loans in countries such as China, India and Singapore.
'Citi has the most obvious gross exposure to a slowdown in Asia', said David Knutson, a Chicago-based credit analyst with Legal & General Investment Management America. 'My expectation is that Citi has gone a long ways over the last six to eight months to educate the Fed on the types of risks they’re taking in international markets'.
Pandit, 55, was pushed out by the board last month, a decision driven in part by the bank’s failure to get its capital plan approved by the Fed after the last stress tests, a person familiar with the matter said in October. Michael Corbat, who succeeded Pandit, said in an Oct. 16 conference call with analysts that submitting a new capital plan to the Fed by January 5th is one of the issues 'I’m going to spend time focused on it'.
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