Citigroup/Wells Fargo: ready or steady? New Year's day 2012: $30. New Year's day 2011: $30. New Year's day 2010: $30. Guess what? January 2009: $30. And again at the beginning of 2008. The share price of Wells Fargo has been extraordinarily steady for a US bank, making it now the largest in the country by market value. Citigroup, by contrast, has underperformed Wells by almost 90 per cent in the past three years. Both lenders reported third-quarter earnings on Tuesday. Once again Wells pushed all the right buttons, increasing net income by a fifth and exceeding analysts" expectations, while Citi disappointed and had 6 per cent lopped off its stock price. But even these latest results are history and where share prices go from here is all that matters. So which bank should an investor own, if any? Reversion to mean junkies will favour Citi, whose price to tangible book ratio at 0.6 times is considerably lower than Wells. Citi's earnings multiple is also two-thirds as expensive. But the two banks are such different beasts that a straight valuation fight is probably the wrong way to go. In the fourth quarter, for example, almost 70 per cent of Citi's continuing revenues came from outside North America. It is barely a US bank any more. Wells on the other hand is a retail and commercial lender whose fate lies with the US economy (95 per cent of loans). Is the US destined for two decades of domestic sluggishness à la Japan? Suddenly, Citi's large exposure to the fastest growing and most underbanked parts of the planet looks pretty clever. But what if the hot streaks in Asia and Latin America, say, come to an end before Citi even manages to get its costs in these markets under control? Asia and Latin America have a combined cost income ratio of 82 per cent. Wells wins. Or what if the American housing market and unemployment situation suddenly spark back to life? Citi, with its leveraged investment bank, would benefit. But even relatively expensive Wells would go through the roof.