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Citigroup Inc. (NYSE:C) was down over three percent today after a 34% rise since the start of the year. The bank which had a very difficult 2011 has shown some recovery this year but failed the Federal bank stress test despite meeting the requirements. The bank failed that test after objections to its plan to return capital to its shareholders. The bank had met the other requirements in the test. In order to pass the test the bank will need to submit a new revised statement on its plans later in the year.

One analyst who has not been taken in by Citygroup’s (NYSE:C) rise was Meredith Whitney. The banking analyst rose to fame in 2007 after penning an article on the group which criticised the firms practices and pointed out many of the flaws that haunt the bank up to this day. Whitney when questioned by CNBC this afternoon insinuated she would need a brain transplant to support the bank in todays market. Ms. Whitney’s opinions are often taken to heart by the market since her initial predictions on Citigroup (NYSE:C) .

Citigroup faces substantial problems in the future and has not escaped comfortably its performance last year. 2011s fourth quarter showed disappointing results that were well below the market’s expectations after a reasonably solid 3rd quarter. The company headed by Vikram S. Pandit has a long way to go before it can convince investors that it is a steady bet again, despite increases this year. What is clear is that the company is trailing the likes of Wells Fargo (NYSE:WFC) and Bank of America (NYSE:BAC), both of whom were up this afternoon. The company will need to overcome today’s stress test setback and solidify its operations worldwide as it has been trying to do since the financial crisis. If it is not seen as improving in these sectors Meredith Whitney’s analysis may well be correct.