Citigroup posts $5.1 billion loss due to hefty write-downs

[April 18, 2008]  NEW YORK (AP) -- Citigroup Inc. said Friday it lost $5.1 billion during the first quarter as poor bets on mortgages and leveraged loans lopped billions of dollars from its investment portfolio.

Write-downs related to mortgages and turmoil in the credit markets reached about $12 billion.

The most recent quarterly shortfall at the nation's biggest bank by assets is not as massive as the nearly $10 billion loss it suffered in the fourth quarter of last year.

Shares of Citigroup rose in pre-market trading and helped pull other stock futures higher, as many investors had been bracing for even more dismal results.

However, Citigroup's loss of $1.02 per share is in sharp contrast to its profit of $5 billion, or $1.01 per share, in the first three months of 2007. And analysts, on average, had expected the New York-based bank to lose 95 cents per share, according to a Thomson Financial survey.

Citigroup said that before taxes, it took $6 billion in write-downs and credit costs on exposure to sub-prime mortgages; $3.1 billion in write-downs on funded and unfunded highly leveraged finance commitments; a downward credit value adjustment of $1.5 billion related to exposure to bond insurers; $1.5 billion in write-downs on auction-rate securities; and a $3.1 billion rise in credit costs for consumers around the world.

Citigroup wrote down about $18 billion in the fourth quarter of last year, and about $6 billion in the third quarter.

The bank, which replaced its former chief executive Chuck Prince with the Morgan Stanley investment banking veteran Vikram Pandit late last year, has been scrambling for cash.

In December and January, Citi raised over $30 billion through sales of assets and stock to outside investors, some of which have been funds run by Asian and the Middle Eastern governments. It also has been cutting costs through eliminating jobs -- 4,200 job cuts were announced in January -- and has been reorganizing the bank's various businesses.

"We are taking the necessary steps to make Citi more efficient while fostering a culture of accountability and teamwork," Pandit said in a statement. "As we move into the second quarter and beyond, we will continue to divest non-strategic assets and allocate capital to the products and regions that will drive increased revenues, enhance the value of our franchise, and ultimately, maximize shareholder value."

The Financial Times reported Friday that Pandit vowed to cut costs by 20 percent.

[Associated Press]

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