Citigroup posts ‘unacceptable’ loss

The bank lost $10 billion in the fourth quarter and received a $12.5 billion in cash from a number of sources.

Citigroup Inc. posted a loss of nearly $10 billion in the fourth quarter of 2007, resulting from a $18.1 billion write-down related to exposure to bad subprime-mortgage loans.
The write-down is significantly larger than the $6 billion write-down in the third quarter of 2007, and significantly larger than the $8 billion to $11 billion fourth-quarter write-down that the bank estimated it would take in November (InvestmentNews, Nov. 5) .
The New York-based financial services company said it lost $9.83 billion, or $1.99 a share, down from net income of $5.13 billion, or $1.03 a share in the year-ago period.
“Our financial results this quarter are clearly unacceptable,” said Citigroup’s new chief executive Vikram Pandit, in a statement.
The company also said it had received a $12.5 billion cash infusion to improve its capital position, which included a $6.88 billion investment from the Government of Singapore Investment Corp. Ltd.
Other investors included 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 infusion in addition to the $7.5 billion that Citigroup received in November from the Abu Dhabi Investment Authority in exchange for a 4.9% stake in the company (InvestmentNews, Nov. 27) .
Additionally, company also announced that it was slashing its dividend payout by 41% to 32 cents from 54 cents, in an effort to strengthen its balance sheet.
On a positive note, the wealth management unit, which includes its Smith Barney brokerage business, saw its fourth-quarter revenue increase 27%, resulting from an 18% increase in fee-based and net-interest revenue and 43% increase in transactional revenue.