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Old 2nd February 2008, 04:42 PM
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Just how bad is it at Citicorp?

This tells me much more about Citicorps credit rating than anything else!

http://news.bbc.co.uk/1/hi/business/7224268.stm

Angry customers of internet bank Egg have hit out at its decision to cancel their credit cards.

Egg says 161,000 cards belonging to people whose credit profiles have deteriorated since they signed up will stop working in 35 days time.

But people who insist they have good records have been contacting the BBC to say they are on the list.

A Labour MP is asking the banking industry watchdog, the Financial Services Association, to investigate.

Nigel Griffiths, a former deputy leader of the House of Commons, said Egg's action was "unacceptable".

A spokesman for the bank said those affected were customers it no longer wanted to lend to "regardless of their current status".

Credit cards are being withdrawn from 7% of Egg's customers who it deems to pose an unacceptably "high risk".

This could include those who have missed repayments or exceeded their credit limit.

Cardholders will be able to continue making minimum monthly repayments on their balances but will not be able to spend any more after the deadline.

The move follows a "one-off" review after Egg was bought by US-based Citigroup for £575m last year.

The bank is not demanding immediate repayment of balances or making any changes to customers' terms and conditions or their interest rates.

The 35-day notice period starts on receipt of the letter, which also provides details of how to appeal against the decision.

But the move has triggered an angry backlash from some customers who told the BBC they received a letter informing them of the withdrawal, despite having an excellent credit history.


Whilst it is lovely to spend, it is the paying back that is always the difficulty
Angela Knight
British Bankers Association

Gillian Cox, of Farnham, Surrey, said she was "absolutely furious" to learn her credit card had been cancelled in what she described as an "unbelievable arbitrary action".

Mrs Cox said she and her husband are "retired, no mortgage, no debts" and "always paid the balance off in full each month".

She added that she had contacted credit reference agency Experian who said she was marked as having an excellent credit rating, "thus totally negating Egg's claim that this measure is about credit risk".

A spokesman for Egg said: "We are sorry some customers are upset after receiving notification we are ending their credit card arrangement, but they are people we do not feel it is appropriate to lend any money to."

He added: "The decision was taken after an extensive one-off review of our credit card book following acquisition by Citigroup."

"We can certainly understand the concerns, but even if people are up-to-date with repayments, they are people we decided we no longer wish to lend money to regardless of their status."


This will not have a detrimental effect, it may even have a positive effect
Peter Brooker
Experian public affairs director

Angela Knight, chief executive of the British Bankers Association, said that Egg's action was "a sensible way of looking after a business".

"Whilst it is lovely to spend, it is the paying back that is always the difficulty. It might seem a bit hard to say to people 'You do need to stop spending' but it does actually make real sense so to do."

Peter Brooker, public affairs director of credit reference agency Experian, said the move would not have a negative impact on the credit rating of those affected and could even improve it.

"Credit reports only have balances showing as outstanding or settled and a date. So when Egg updates its portfolio with us, it would just say those accounts have been settled," he advised.

"That will not have a detrimental effect, it may even have a positive effect, but that depends on the scoring mechanisms used by lenders and the other balances the individual has.

"Some lenders might feel that someone with five credit cards is a risk but someone with four is a better bet and the fact that one card has been settled could be a positive sign. To other lenders it may make no difference."

Egg's decision could be a signal of the tightening credit market, with consumers facing more difficulty in repaying debts and reducing spending.
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Old 2nd February 2008, 05:01 PM
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Re: Just how bad is it at Citicorp?

With recession, credit card crunch is coming soon, only matter of time. but i'm surprised it's uk that reports first. :o
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Old 2nd February 2008, 05:07 PM
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Re: Just how bad is it at Citicorp?

I think Citigroup is having trouble balancing the books, but is afraid to scare the US market as that will almost certainly put it in even bigger problems.

I think the reason we have seen so little depreciation of the dollar in recent weeks is that a lot of cash is being repatriated to the US to patch the holes in the books. Once that repatriation starts to dry up a bit the dollar will pancake.
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Old 2nd February 2008, 10:21 PM
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Re: Just how bad is it at Citicorp?

I think it's happening in the USA too, Touch.

I read on another board a guy complaining that he'd got a letter from his credit card company telling him his rate as going up from 7% to 20% the following month, and if he didn't agree to it he had to stop using the card.
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Old 3rd February 2008, 06:35 AM
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Re: Just how bad is it at Citicorp?

The other point on the dollar is that most commodities are still traded in dollars. High Oil and Gold prices probably help to support the dollar. If these go into reverse, there is a substantial reduction in transaction levels or there is a substantial increase in non-dollar trading, that crutch for the dollar will be kicked away.
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Old 3rd February 2008, 06:35 AM
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Re: Just how bad is it at Citicorp?

I've no doubts that such a thing would happen in the US having read that card companies regularly do housekeeping even during the housing boom to eliminate less profitable customers.

But i doubt they could do the same in Singapore or they have to terminate 70% of their subscribers!
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Old 3rd February 2008, 06:37 AM
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Re: Just how bad is it at Citicorp?

If they have to do this to stop their main US trading company from collapsing they will!
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Old 3rd February 2008, 07:37 AM
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Re: Just how bad is it at Citicorp?

First of all if the dollar collapses the rest of the world follows. Just the way it is. We saw a taste a few weeks ago when a collapes of the world-wide trading markets were in our future.

Second, seems Shell Oil had a record year. Go figure.
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Old 3rd February 2008, 07:47 AM
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Re: Just how bad is it at Citicorp?

Quote:
Originally Posted by sarcle
Second, seems Shell Oil had a record year. Go figure.

everyone is trying to rip out as much money as possible from the golden goose.
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Old 3rd February 2008, 07:53 AM
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Re: Just how bad is it at Citicorp?

Quote:
Originally Posted by sarcle
First of all if the dollar collapses the rest of the world follows. Just the way it is. We saw a taste a few weeks ago when a collapes of the world-wide trading markets were in our future.

Second, seems Shell Oil had a record year. Go figure.
That is certainly the way it has been, and undoubtedly the collapse of the dollar trading system will cause significant turbulence. But the assumption that is "just the ways it is", is one that is almost certain to be disproved very soon!

Sure Shell had a record year, what oil company didn't? Demand is bound to drop off and prices ease as the US goes into recession. The US burns half the World's Oil and for what? There will be knock on effects. China's growth rate will slow to about 8%, but it will still be catching the US at an ever increasing speed due to dramatic currency realignments, which are already in train.
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Old 3rd February 2008, 10:30 AM
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Re: Just how bad is it at Citicorp?

Quote:
Originally Posted by sarcle
First of all if the dollar collapses the rest of the world follows. Just the way it is. We saw a taste a few weeks ago when a collapes of the world-wide trading markets were in our future.

Well, early dec, i did put up a warning of conmen trying to sell china reits and efts.

I've been putting out warnings on other forums since October. Those who bought into the decoupling picture in oct would have lost many times more money than they if they invested in Wallstreet stocks.

http://www.idnforums.com/forums/1532...boom-over.html

Real economies can decouple to some extent, but bubbles don't decouple. One super bubble pricked leads to bubbles bursting everywhere else.
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Old 3rd February 2008, 11:18 AM
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Re: Just how bad is it at Citicorp?

Maybe, but don't let us delude ourselves about where the Super Bubble really exists. No amount of American running around crying wolf everywhere else would convince me to put one dime into Wall Street. And on top of the financial logic, there are the trust issues. They are the bastards that conned half the World into buying worthless bonds in the first place!

Quote:
Originally Posted by touchring
Well, early dec, i did put up a warning of conmen trying to sell china reits and efts.

I've been putting out warnings on other forums since October. Those who bought into the decoupling picture in oct would have lost many times more money than they if they invested in Wallstreet stocks.

http://www.idnforums.com/forums/1532...boom-over.html

Real economies can decouple to some extent, but bubbles don't decouple. One super bubble pricked leads to bubbles bursting everywhere else.
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