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WORLD> America
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Citigroup posts loss, splits up the bank
(Agencies)
Updated: 2009-01-16 23:29 NEW YORK – Citigroup said Friday it is splitting into two businesses as it reported a fourth-quarter net loss of $8.29 billion - its fifth straight quarterly loss.
In Citigroup's reorganization, one business, Citicorp, will focus on traditional banking around the world, while the other, Citi Holdings, will hold the company's riskier assets.
Shares rose about 4 percent in pre-market trading. Some investors have been calling for a breakup of Citigroup for years, as the bank struggled to keep up with its Wall Street peers. Those calls grew louder as the mortgage crisis caused the company's troubles to mount. There has been harsh blame for Citigroup's woes directed at the board, too - and the company said Friday it plans to get rid of more board members after the recent departure of long-time director and former Treasury Secretary Robert Rubin. "There has been one announced departure from the board. Together with other anticipated departures, this gives us the opportunity to reconstitute the board and we will do so as quickly as possible," said Richard Parsons, Citi's lead director, in a statement. The New York-based bank's fourth-quarter loss amounted to $1.72 per share. Analysts expected a loss of $1.31 per share. While the per-share loss was higher than the consensus estimate, the total loss was smaller than the $10 billion many investors feared. For the year-ago fourth quarter, Citigroup had a net loss of $9.83 billion, or $1.99 per share. The results were "clearly disappointing," Pandit said during a conference call with investors. "I can assure you that my No. 1 priority is to return this company back to profitability." For the latest quarter, Citigroup marked down $7.8 billion in securities and banking revenue, and $5.3 billion on the value of credit derivatives. It also lost $2.5 billion in private equity and equity investments, $2 billion in restructuring costs, and $6 billion to add to reserves. It also booked more than $4 billion in gains, after taxes, from selling its German retail bank and its India-based outsourcing business. Revenue fell 13 percent to $5.6 billion from a year ago. At its peak performance in the second quarter of 2007, Citigroup was pulling in $25.8 billion in revenue. Citigroup used to be the largest bank by assets, but recently lost that title to JPMorgan Chase & Co. After massive layoffs and business sales in 2008, the bank's work force dropped by about 52,000 to 323,000 in 2008, the company said. Last fall, Pandit announced Citigroup would shed a total 75,000 employees - meaning there are 23,000 employees still to be let go. |
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