Citigroup registers record US$9.83bn quarterly loss

Citigroup Inc lost almost US$10 billion in last year's final three months, the largest quarterly deficit in its 196-year history, and slashed its dividend and 4,200 jobs as it recorded a mammoth write-down for bad bets on the mortgage industry.

The largest US bank wrote down the value of its portfolio by US$18.1 billion. It also boosted loan-loss reserves by US$4.1 billion, signaling further problems in its consumer businesses as deflated home prices, high energy and food costs, and rising unemployment weigh on people's ability to make their loan payments.

To cut expenses, it slashed 4,200 jobs in the fourth quarter in addition to the 17,000 layoffs announced in the spring, and chief financial officer Gary Crittenden said during a conference call that more job cuts were on the way.

Chief executive Vikram Pandit, who replaced Charles Prince last month, said the fourth-quarter results were "unacceptable" and that he was "not yet finished" in his review of whether any of the global bank's core operations need to be cut or sold.

To bolster its capital, the bank also said yesterday it had lined up US$12.5 billion in new investments from sovereign wealth funds and existing shareholders.

That includes US$6.88 billion from the Government of Singapore Investment Corp for a 4 percent stake. Other investors were Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of Investment, shareholder Prince Alwaleed bin Talal of Saudi Arabia and former chief executive Sanford Weill and his family foundation.

The US$12.5 billion in fresh equity adds to the US$7.5 billion that Citi got in November from the Abu Dhabi Investment Authority in exchange for a 4.9 percent stake in the company.

The loss for the quarter totaled US$9.83 billion, or US$1.99 per share, compared with earnings of US$5.13 billion, or US$1.03 per share, during the same quarter a year earlier. Citigroup's revenue fell to US$7.22 billion, down 70 percent from US$23.83 billion in the final quarter of 2006.

Citigroup said the 41 percent cut in its quarterly dividend to US$0.32 a share from US$0.54 -- along with the Asian investments and a stock offering of about US$2 billion -- will help boost its Tier 1 capital ratio, a measure of its financial strength.

Citigroup's decision to cut its dividend and seek new cash from outside investors was widely anticipated on Wall Street after months of scrutiny over the bank's deteriorating operations. The biggest was Citigroup's bad bets on mortgage-backed bond instruments called collateralized debt obligations. It also was forced to bring US$49 billion in hemorrhaging funds known as structured investment vehicles onto its books.

Pandit said Citigroup would continue to sell off "non-core" assets. The bank has already sold shares in Redecard, a card business in Latin America, and an ownership interest in a unit of the Japanese brokerage Nikko Cordial it bought last year.