Citigroup posts $10 billion loss, cuts jobs

ByABC News
January 16, 2008, 1:05 AM

NEW YORK -- New Citigroup CEO Vikram Pandit on Tuesday promised better results at his beleaguered bank after a financial report left investors wondering if the worst is over.

Pandit, who became CEO in December, termed the results "unacceptable" and told analysts that "we need to do better, and we will do better."

Shaken by the erosion of its capital in recent months, Citi struck a deal for a $12.5 billion cash infusion from the sovereign investment funds of Singapore, Kuwait, a New Jersey state fund, a domestic investment fund and two men already heavily committed to the success of the bank: Saudi Prince Alwaleed bin Talal, who owns about 4% of Citi stock, and former Citigroup CEO Sandy Weill.

The bank also said it plans to sell $2 billion of new shares to the public and cut its quarterly dividend from 54 cents a share to 32 cents, saving $5 billion a year. The moves come weeks after Citi announced a $7.5 billion cash infusion from the government investment fund of Abu Dhabi.

As a cost-cutting move, Citi announced it would lay off 4,200 employees out of more than 300,000 employed worldwide. Chief Financial Officer Gary Crittenden warned that further layoffs could be ahead. Last spring, the bank announced a staff reduction of 17,000. In addition to the $18 billion subprime write-down, Citigroup also boosted its loan-loss reserves by $4 billion to cover anticipated losses on consumer loans.

Citigroup announced a fourth-quarter net loss of $9.8 billion, or $1.99 a share, vs. earnings of $5.1 billion or $1.03 a share a year earlier. Revenue fell 70% to $7.2 billion.