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Citigroup posted the biggest loss in the bank's 196-year history as surging defaults on home loans forced it to write down the value of sub-prime mortgage investments by US$18 billion ($23b).
The fourth-quarter net loss of US$9.83 billion compared with a profit of US$5.1 billion, the New York-based bank said. Citigroup reduced its dividend by 41 per cent and is selling US$14.5 billion of preferred stock to investors to shore up depleted capital.
CEO Vikram Pandit axed 4200 jobs and plans more cuts.
The results are "unacceptable", Pandit said yesterday.
He was installed in December after Charles "Chuck" Prince stepped down amid mounting sub-prime losses.
"We need to do better, and we will."
Citigroup fell 7.3 per cent in New York trading as the largest US bank warned of rising delinquencies on its US$214 billion portfolio of home loans and said more credit-card and auto loans were going bad. The bank cited a slowing economy in setting aside US$5.2 billion to cover loan losses in its US consumer division, about five times the year-earlier amount.
The markdown on sub-prime securities, almost double what the company forecast in November, also was the biggest so far among the world's top financial companies, exceeding the US$14 billion by Zurich-based UBS AG, Europe's largest bank.
Standard & Poor's reduced its long-term rating on Citigroup to AA- from AA, reflecting the "severe losses" and the likelihood that the bank's 2008 performance "could be rocky".
- BLOOMBERG
