CITIGROUP has a world of problems.

    The bank is proud of its global reach — 1,400 branches in 46 countries. But in Asia, the economies of China and India are slowing. And Europe, the source of one in three dollars that Citi brings in, may be on the brink of financial disaster.

    Citi’s rivals JP Morgan Chase and Bank of America have Europe problems too, but they also have U.S. branch networks about five times the size of Citi’s. And bank business in the United States, like the economy, is improving.

    Wells Fargo has hardly any European business at all, and was rewarded Tuesday with a small gain in its stock price after reporting impressive quarterly earnings. Citi disappointed Wall Street and got pummeled, down 8 percent.

    Being worldly is not so sexy any more.

    “The effect of a contagion from Europe will be catastrophic for Citi,” said Jeffrey Sica, chief investment officer of Sica Wealth Management, an independent wealth manager.

    At year’s end, Citi held US$33.4 billion in debt issued by European countries and loans to businesses in debt-hobbled countries such as Greece, France, Belgium and Ireland.

    While comparisons are difficult because banks have different standards for judging “exposure,” Fitch Ratings, a prominent credit rating service, said in November that Citi was the most exposed of the big U.S. banks.

    “Europe remains a dark cloud,” John Gerspach, Citi’s chief financial officer, told reporters after the financial results were released. But he said the bank had hedged its bets well and was “highly confident” that the losses would be contained.

    Citi posted about US$40 billion in losses in 2008 and 2009 combined. For a time, it was majority-owned by the U.S. Government.(SD-Agencies)