I was thinking about how should one value Citi. Its peak EPS in 2006 was $4.24. I think it will be another 5 years before it returns to that EPS level, because (a) The company has diluted by about 10%, so peak EPS on today's share count is more like $3.80, (b) leverage in SSB is going down for sure - I think its earnings are impaired for at least half a decade (c) there is a recession/slowdown in US. So some impact on banks is bound to happen.
So lets assume Citi hits $4.24 in 2012. At 11x PE, I will value it at $46.80 in 2012. Assuming 12% discount rate (why will I invest in a financial today if I dont double my money in 4 years, so 12% discount rate + 5% dividend = 17% effective return over 4 years = double money), I will value Citi today at $29.74.