Citi loss ups recession fears

16-01-2008

Citi loss ups recession fears
Citigroup has revealed that it experienced a net loss of nearly $10 billion (£5 billion) in the last quarter amid subprime mortgage exposure.

Results for the last three months were widely expected to show a loss. The US's largest bank has been watched closely as a benchmark for the financial industry.

Amid recession fears in the US, the loss has increased anxiety over the international economy and caused share prices to slide across the board on word of the news.

"Our financial results this quarter are clearly unacceptable," said Citi's new chief executive Vikram Pandit.

"Our poor performance was driven primarily by two factors - significant write-downs and losses on our subprime direct exposures in fixed income markets, and a large increase in credit costs in our US consumer loan portfolio."

The statement went on to note that revenues were slightly above $7 billion (£3.5 billion), down 70 per cent compared to its fourth quarter 12 months ago.

The largest bank in the US said that it will write-down $18.1 billion (£9 billion) as a result of bad mortgage investments and credit costs, and that it will cut its dividend payment by close to half.

Rumors of layoffs have not been confirmed.

More positively, the release said that these figures were "partially offset" by growth in currency trading, transaction services, commodities and advisory revenues.

"Revenues and volumes continued to grow strongly in a number of our franchises," 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."

Shares of Citigroup fell by more than seven per cent to $26.94 (£13.47) on the New York stock exchange in trading yesterday.

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