Citi Shares Fall Despite Talks With Morgan Stanley

Citi could report an operating loss as large as $10 billion during the fourth quarter, according to the report in the Journal. About $4 billion of the loss would be offset though by a gain from the bank's sale of its German retail banking operations in a deal that closed late last year, the newspaper said.

Citigroup headquarters in New York Monday, Jan. 12, 2009. Citigroup and Morgan Stanley may announce...

Citigroup headquarters in New York Monday, Jan. 12, 2009. Citigroup and Morgan Stanley may announce as early as Monday a deal to combine their brokerages, a move analysts say could trigger a fresh wave of consolidation in the troubled and thinning banking industry. (AP Photo/Richard Drew)

(AP)

Citigroup declined to comment Monday on the newspaper reports. The Federal Reserve also declined to comment on the government's reported involvement in replacing Bischoff.

Given the amount of taxpayer money that Citigroup has gotten, such intervention in the bank's operations would not be surprising.

"Banking regulators always have a lot of influence ... and hope financial institutions have the right people in the right jobs at the right time. When a banking organization comes hat in hand to the government, the government's hand is strengthened," Wilcox said.

Analysts polled by Thomson Reuters, on average, forecast a loss of $1.14 per share for the fourth quarter. Based on Citi's outstanding share count as of Sept. 30, that would translate to a loss of more than $6 billion. Analysts do not always include special one-time gains in their estimates.

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AP Business Writers Stephen Bernard and Sara Lepro in New York and AP Economics Writer Jeannine Aversa in Washington contributed to this report.

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