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Citigroup's $9.8bn sub-prime loss Citigroup's $9.8bn sub-prime loss
(40 minutes later)
US banking giant Citigroup has reported a $9.83bn (£5bn) net loss for the last three months of 2007.US banking giant Citigroup has reported a $9.83bn (£5bn) net loss for the last three months of 2007.
Chief executive Vikram Pandit said the loss had been caused by a $18.1bn exposure to bad mortgage debt and was "clearly unacceptable".Chief executive Vikram Pandit said the loss had been caused by a $18.1bn exposure to bad mortgage debt and was "clearly unacceptable".
The company, the largest banking group in the US, said its revenues for the fourth quarter were down 70% from a year earlier to $7.2bn. The company, the largest banking group in the US, said revenues during the fourth quarter fell 70% from a year earlier to $7.2bn.
Mr Pandit has pledged to turn around Citigroup's fortunes.Mr Pandit has pledged to turn around Citigroup's fortunes.
'Tight control'
It was also announced that Citigroup is going to get a cash injection of $6.88bn from Singapore government investment agency GIC.It was also announced that Citigroup is going to get a cash injection of $6.88bn from Singapore government investment agency GIC.
This follows a similar $7.5bn investment in Citigroup from another government agency, the Abu Dhabi Investment Authority, last November.This follows a similar $7.5bn investment in Citigroup from another government agency, the Abu Dhabi Investment Authority, last November.
'Tight control' The firm also said that it would be cutting its dividend for the quarter by 41%, from 54 cents to 32 per share, as well as raising $14.5bn by selling securities.
Mr Pandit only took up the top job at Citigroup last month, following the departure of his predecessor Charles Prince.
CITIGROUP Citibank was founded in 1812 in New YorkIt has 200 million customer accounts in 100 countriesMore than 300,000 employees$2.4 trillion in assets Sources: Citigroup, Reuters
Mr Prince resigned in November after the full extent of Citigroup's sub-prime mortgage losses began to emerge.
"We have begun to take actions to ensure that Citi is well positioned to compete and win across our franchises while effectively keeping a tight control over our business risks," said Mr Pandit."We have begun to take actions to ensure that Citi is well positioned to compete and win across our franchises while effectively keeping a tight control over our business risks," said Mr Pandit.
Mr Pandit took up the top job at Citigroup only last month, following the departure of his predecessor, Charles Prince.
CITIGROUP Citibank was founded in 1812 in New YorkIt has 200 million customer accounts in 100 countriesMore than 300,000 employees$2.4 trillion in assets Sources: Citigroup, Reuters
Mr Prince resigned in November after the full extent of Citigroup's sub-prime mortgage losses began to emerge.
'Credit woes'
The sub-prime market is focused on providing loans to those with limited or poor credit histories.
During the US housing boom, this market expanded significantly. But a series of interest rate rises over two years meant many sub-prime borrowers could no longer afford their monthly payments, causing them to default on loans.
Citigroup is far from alone in being hit by bad debt, but its write-off is by far the biggest announced by any bank to date.
Analysts generally welcomed the results, as the $18.1bn bad debt write down was less than market expectations of $20bn.Analysts generally welcomed the results, as the $18.1bn bad debt write down was less than market expectations of $20bn.
MAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn UBS: $13.5bn Morgan Stanley $9.4bn Merrill Lynch: $8bn HSBC: $3.4bnBear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bnBarclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bnCredit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bnSource: Company reports Timeline: How the sub-prime crisis unfoldedMAIN SUB-PRIME LOSSES SO FAR Citigroup: $18bn UBS: $13.5bn Morgan Stanley $9.4bn Merrill Lynch: $8bn HSBC: $3.4bnBear Stearns: $3.2bn Deutsche Bank: $3.2bn Bank of America: $3bnBarclays: $2.6bn Royal Bank of Scotland: $2.6bn Freddie Mac: $2bnCredit Suisse: $1bn Wachovia: $1.1bn IKB: $2.6bnSource: Company reports Timeline: How the sub-prime crisis unfolded
They also welcomed the fact Citigroup announced it would still be paying a dividend, although this was reduced to 32 cents per share from 54 cents. However, analysts had mixed views on what message cutting the dividend and selling securities sent to the market.
"If you maintain dividend and reinforce your capital base, and you take a write-down that is slightly less than expected, all in all, it's decent," said Edmund Shing, strategist at BNP Paribas. "It does nothing to send any signal that we are anyway near the end of the road that we've been going along for the past seven months, in the overall credit market woes," said Howard Wheeldon, senior strategist at BGC partners.
Despite press reports that Citigroup would announce more than 20,000 job losses, none have so far been revealed.Despite press reports that Citigroup would announce more than 20,000 job losses, none have so far been revealed.