NEW YORK (CNNMoney.com) -- Citigroup may no longer be on life support. But that's little consolation for the bank's numerous shareholders, a group that now includes every taxpayer in the country.
Shares of Citi, like the shares of most other banks, did rally sharply from the depressed lows of early March. But while other bank stocks have continued to head higher, Citi (C, Fortune 500) has lost its momentum.
Citi traded as high as $5.43 in late August but now hovers around $4. At the same time, other big banks, most notably JPMorgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500), have continued to rally and are near 52-week highs.
And while shares of other financial giants, such as Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and American Express (AXP, Fortune 500), have more than doubled so far in 2009, Citi has still not completely recovered the ground it lost over the winter. Despite quadrupling since March, Citi's stock is still down almost 40% this year.
So is there any hope for taxpayers? Maybe. But be prepared to wait a while.
Citi, which needed $45 billion in bailout funds to stay afloat, is now firmly under the government's thumb.
And while the government's backing may have helped Citi bounce back from the brink -- the stock briefly traded below $1 a share on fears that Citi would be nationalized -- it may also be a key reason why Citi is missing out on the broader bank rally.
Taxpayers own more than a third of the bank following the conversion of a big chunk of preferred shares the government originally acquired in exchange for TARP money into common stock.
Citi has since been busy shedding assets in order to raise capital. Apparently, you can't be too big to fail if you're no longer intent on being that big.
According to reports, Citi is close to finalizing a deal to sell its Japanese telemarketing unit Bellsystem24 to private equity firm Bain Capital for about $1.1 billion. That deal follows last month's sale of Nikko Cordial Securities to Sumitomo Mitsui Banking Corporation last month for $8.7 billion.
And Citi hasn't just been downsizing in Japan. The company announced last week that it filed for an initial public offering of a portion of its Primerica life insurance unit. Once the IPO is complete, Citi said it will sell its remaining stake in Primerica.
The bank has also agreed to sell its controversial energy-trading division Phibro to Occidental Petroleum (OXY, Fortune 500) and sell three credit card portfolios to U.S. Bancorp (USB, Fortune 500).
Finally, in the most sweeping move of all, Citi merged its Smith Barney brokerage unit with Morgan Stanley earlier this year. That gives Morgan Stanley a majority stake in the joint venture.
