A lot has been made of Citi's move to prod the government to convert its preferred shares into common shares, even though this would harm existing shareholders. TheStreet.com notes that the move would save $563 million a quarter in dividend payments, but also make the bank's Tangible Common Equity, as a percent of total equity, look better. The TCE ratio looms very large now because the Treasury is expected to focus on that ratio in its stress tests of large banks.

Unfortunately, Citi's ratio doesn't look that great. The article notes Citi's ratio of 1.5 percent compared to 3.9 percent for JPMorgan Chase, 2.6 for Bank of America, and 2.8 for Wells Fargo (all numbers from Barclays). So Citi may be feeling some heat from the tests.

For more:
- here's the article

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