Citigroup Inc. and Morgan Stanley Benefit From Financial Sector Recent Swing

NEW YORK, NY--(Marketwire -03/28/12)- Banks and financial companies have led this year's rally. The most widely held Financial ETF, Financial Select Sector SPDR Fund, has gained 22 percent. U.S. stocks may extend their rally by 30 percent this year as investors move money from bonds into stocks on growing confidence about the economy, said Michael Gayed, chief investment strategist at Pension Partners LLC. The Paragon Report examines the outlook for companies in the Banking industry and provides equity research on Citigroup Inc. (NYSE:C - News) and Morgan Stanley (NYSE: MS - News).

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"Financials are the key to everything," said Gayed. "If banks are telling you things are OK through dividend increases and stock buybacks, it's an automatic sign the financial crisis is coming to an end and that they see an improvement."

The Federal Reserve recently said 15 of the 19 largest U.S. banks could maintain adequate capital levels even in a severe recession scenario that assumes they continue to pay dividends and buy back stock. "It is night and day," Jason Goldberg, senior analyst at Barclays Capital Inc. in New York, said before the announcement. "In 2009, about half the banks failed the stress test. The industry's capital position is higher today, and better quality. There is a lot less leverage."

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Citigroup Inc. recently reported it will sell more than half its stake in Akbank TAS, Turkey's second-biggest listed bank by market value. Citigroup is currently shedding assets around the world, including India and China, to meet capital requirements.

Morgan Stanley has declared a regular quarterly dividend on the outstanding shares of each of the following preferred stock issues:

  • Floating Rate Non-Cumulative Preferred Stock, Series A -- $252.78 per share (equivalent to $0.25278 per Depositary Share)
  • 10 Percent Non-Cumulative Non-Voting Perpetual Preferred Stock, Series C -- $25.00 per share

The dividends for the Preferred Stock Series A and C are payable on April 16, 2012 to stockholders of record at the close of business on March 30, 2012.

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