US financial giant Citigroup announced a radical overhaul of its troubled US mortgage business on Thursday, aimed at stemming multibillion dollar losses triggered by the US housing slump.
The New York-based banking group said that it would no longer offer certain types of riskier mortgage loans. In addition, it was sharply cutting back its mortgage investments.
"This end-to-end realignment will create a simplified and streamlined organization that is more sharply focused on clients," CitiMortgage Inc president Bill Beckmann said.
The bank is tightening its home loan underwriting procedures and said its mortgage businesses will be integrated under its new CitiMortgage division.
Citigroup has seen its finances and share price ravaged by the US housing downturn and a related credit crunch that has afflicted a widening range of exotic securities and investments.
Top executives have blamed the housing crisis for Citigroup's huge fourth-quarter loss of US$9.83 billion, which contributed to the resignation of former chief executive Charles Prince.
Citigroup's new CEO, Vikram Pandit, is vying to stem the global bank's losses and shore up its stressed balance sheet, partly through raising fresh capital from foreign investment funds such as the Government of Singapore Investment Corp Pte Ltd.
Executives plan to cut residential mortgage assets in Citigroup's US mortgage business by approximately US$45 billion in the next year, marking a 20 percent drop from last December.
The bank, one of the largest in the US, said it also intends to slash the volume of new mortgage loans held in its investment portfolios by more than 50 percent in the next 12 months.
Citi said that it was also integrating some offices to further slash costs.
It expects the overhaul to yield annual expense savings of around US$200 million.
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