Citigroup Loses Big On $18 Billion Writedown

by Darren

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An $18 billion writedown is tough for any company to swallow, even Citigroup. Losses on consumer loans and a recent $9 billion+ loss are making things tough at the world’s largest financial company.

Citi also said it would raise $12.5bn in new capital to shore up its balance sheet through the sale of convertible preferred securities and would cut its quarterly dividend by 40 per cent, from 54 cents to 32 cents a share.
EDITOR’S CHOICE
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The Government of Singapore Investment Corporation will invest $6.88bn. Other investors will include the Kuwaiti Investment Authority, Prince Alwaleed bin Talal, one of Citi’s largest shareholders, and Sandy Weill, former chief executive. Citi will also sell $2bn worth of new securities to public investors.

Vikram Pandit, Citi’s recently installed chief executive, called the results “clearly unacceptable” but noted that the bank achieved record results in several businesses including international consumer, transaction services, wealth management and advisory.

The investment by the Singapore Investment Corporation signifies a continuing trend of huges stakes being purchased in large American banks. Obviously, the capital infusion is sorely needed, and selling stock is better for them than issuing debt.

All in all, though, it’s tough to see much good news in this story for C.

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