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Analyst's downgrade sends Citigroup shares falling

Citigroup Inc shares shed US$17 billion in market value, falling 10 percent, after Prudential Securities analyst Michael Mayo told investors to sell the stock.

The biggest bank's earnings may be hurt by lawsuits as well as Latin American and consumer loans, he said. New York's Attorney General is expanding his probe into whether Citigroup awarded shares of initial public offerings to corporate executives to win banking business, the Wall Street Journal said.

Shares of Citigroup, the second-worst performer in the Philadelphia KBW banks index, have lost 38 percent of their value this year as its strategy of offering clients debt, equity, merger advice and lending attracted conflict of interest investigations and lawsuits when its clients' business soured.

"The risks at Citigroup outweigh the rewards," said Wayne Bopp, a financial services analyst who helps manages US$30 billion at Fifth Third Bancorp. "We are looking ahead six months and don't see an end to the issues."

Citigroup's stock fell US$3.36 to US$29.39 in New York Stock Exchange composite trading on Tuesday after Mayo -- third-ranked among bank analysts in Institutional Investor magazine's 2001 poll -- downgraded the biggest financial services company to "sell." The decline caused Chief Executive Sanford Weill's personal stake in the company to plummet about US$110 million.
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