5 ms·
Surely the cost of upgrading their user interfaces is less than the $500M lost here? What about next time? What about previous losses that were small enough not
by space_ghost 6y ago
Surely the cost of upgrading their user interfaces is less than the $500M lost here? What about next time? What about previous losses that were small enough not to warrant press attention but still add up over time?
- toomuchtodo 6y agoTo be clear, the entire $500 million isn't lost yet. Citi will need to carry the loan itself for Revlon, so the money didn't evaporate. The cost will be the admin overhead, the reputation loss from the event, and the cost for having to carry the loan into the future (or not, if Citi can find a way to securitize it out). If Revlon defaults on the loan entirely, then the money evaporates.
- kenneth 6y agoThe value of the debt is 42¢on the dollar. So Citi is down 58% on the book value of the $500M in debt. They lost close to $300M from the mistake.
- CydeWeys 6y agoThose are unrealized paper losses. The final accounting can end up being a loss of anything in the range of $0-500M depending on how it all shakes out (whether Revlon goes bankrupt, whether Citibank sells the loans on at their reduced valuations now or holds on, and how the appeal goes).