Citigroup feels heat from credit crunch

Citigroup Inc. is not immune to the mounting losses that have been posted in the credit industry in recent months.
The New York-based financial services giant has lost more than $700 million in credit business in recent weeks, according to a Financial Times report, citing an unnamed person briefed on the situation.
The losses in its credit business, the report stated, may presage losses from the bank’s lending commitments related to leveraged buyouts.
While the scale of the losses is not a serious problem for the company that earned $20 billion last year it is an embarrassment for Charles Prince, Citigroup’s chairman and chief executive, who has been widely criticized for saying last month that the company was “still dancing” in the credit markets, according to FT.
The announced loss comes a couple of days after American International Group Inc. told investors that more than 10% of its subprime mortgages were 60 days overdue, while 4.6% in the category just above subprime were late during the second quarter (InvestmentNews, August 9) .