Citi notes $5.1 billion loss

The Baltimore Sun

NEW YORK -- Citigroup, caught in the midst of the housing slowdown and a tight credit market, reported a $5.1 billion loss yesterday and announced that it would cut 9,000 more jobs in the next 12 months.

The layoffs are in addition to the 4,200 announced in January, the bank said during its conference call. The company has more than 300,000 employees worldwide.

Citigroup, which employs about 6,000 in Maryland, did not specify where the layoffs would occur.

The bank's first-quarter results reflected more than $16.9 billion in write-offs and additional loan loss reserves as Vikram S. Pandit embarked on a plan to reshape the company and clean up the mortgage mess in his first three months as chief executive.

It is the bank's second consecutive quarterly loss as it absorbed heavy blows in all of its four main businesses.

The bank also announced a $622 million restructuring charge.

Wall Street analysts had been expecting Pandit to swallow big losses in the bank's consumer businesses and in investment banking so he could get off to a fresh start. The quarter, littered with eight unusual items and a laundry list of charges, was as messy as they thought.

Citigroup recorded a $6 billion pretax write-down on bad subprime mortgage-related investments and $1.8 billion on the drop in value of commercial real estate as well as other securities tied to structured investment vehicles and less risky mortgages.

It took a $3.1 billion charge tied to the collapse of high-yielding buyout loans, a $1.5 billion hit from its exposure to bond insurance companies and another $1.5 billion write-down on its inventory of auction-rate securities as that market failed. Citigroup set aside another $3.1 billion to cover future losses in its global consumer division, an area that analysts say has long been underserved.

Since many investors had been bracing for even more dismal results, Citigroup shares jumped $1.08, or 4.5 percent, to close at $25.11 yesterday.

"We believe we have substantially reduced our risk given the size of the write-downs we have taken the last few quarters," said Gary L. Crittenden, the bank's chief financial officer. He warned that consumer credit costs may continue to worsen for the remainder of the year.

All told, Citigroup has taken write-offs that total nearly $39 billion, including more than $22 billion in charges in the second half of last year. And with unemployment rising and the economy possibly entering a recession, those figures could continue to grow. Loan losses from mortgages, credit cards and other consumer loans are expected to balloon.

"Our financial results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions," Pandit said in a statement.

Unlike the public comments of other Wall Street chief executives, his published remarks shed no light on Citigroup's prospects in the second half of the year.

Citigroup's first-quarter loss this year was about as much money as the bank earned in the first-quarter of 2007 - clearly its worst results since the company was forged by a merger a decade ago. The company recorded a net loss of $5.1 billion, or $1.02 a share, compared with a gain of $5 billion, or $1.01 a share, a year earlier. Revenue fell to $13.22 billion, a 48 percent drop from 2007.

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