Bad news sends Citigroup stock to nearly 10-year low

NEW YORK -- Shares dropped $1.75 Tuesday morning, or 7.5%, to $21.34, nearly a 10-year low for the bank, before rebounding in the afternoon. At the close of trading in New York, Citi shares stood at $22.10, down 99 cents for the day. Since last May, when the bank's stock hit $55.55, Citi shares have plunged by 60%.

The sell-off began after Sameer al-Ansari, CEO of Dubai International Capital, declared at a private-equity conference in Dubai that Citigroup would need to raise more funds to maintain a healthy balance sheet. Citi has already raised more than $25 billion in recent months from sovereign wealth funds in Kuwait and Abu Dhabi as well as from major shareholders Saudi Prince Alwaleed bin Talal and former Citi CEO Sanford "Sandy" Weill.

Despite the massive infusion of cash in recent months, al-Ansari said, "It's going to take more than that to rescue Citi."

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Jeffery Harte, who follows Citigroup stock for Sandler O'Neill, says any fear of failure at Citi is an "overreaction." He noted that al-Ansari is not an investor in Citi and doesn't have any special access to information. "He could be right and he could be wrong," says Harte, who also predicts a tough quarter for Citi. "It's a tough environment in general for banking."