Open

Coming up

Don't miss

Replay


LATEST SHOWS

ENCORE!

High-tech acting king Andy Serkis on Dawn of the Planet of the Apes

Read more

REPORTERS

Hong Kong in rebellion against the 'motherland'

Read more

TALKING EUROPE

Dalia Grybauskaite, President of the Republic of Lithuania

Read more

MIDDLE EAST MATTERS

Gaza: children caught up in the conflict

Read more

IN THE PAPERS

Was the UN chief’s speech in Tel Aviv really a 'shameful message'?

Read more

IN THE PAPERS

France concerned about anti-Semitism

Read more

WEB NEWS

Online movement demands peace in Gaza

Read more

BUSINESS DAILY

Apple aims to satisfy China's hunger for smartphones

Read more

DEBATE

MH17: Punishing Putin? (part two)

Read more

  • UN human rights chief blasts Israel-Gaza ‘war crimes’

    Read more

  • Remains of Flight MH17 victims arrive in the Netherlands

    Read more

  • Paris braced for new pro-Palestinian rally after clashes

    Read more

  • Two Ukrainian fighter jets shot down over rebel-held territory

    Read more

  • TransAsia Airways Taiwan crash leaves dozens dead

    Read more

  • Video: Fear, death and mourning in Gaza’s Khan Younis

    Read more

  • Young riders raise French hopes for Tour de France

    Read more

  • Defying UK, France to proceed with warships sale to Russia

    Read more

  • Kerry arrives in Israel to push for Gaza ceasefire

    Read more

  • US courts issue conflicting reports on Obamacare

    Read more

  • Video: Lebanon fears fallout from regional turmoil

    Read more

  • Widodo wins Indonesian presidential election

    Read more

  • Flight MH17 shot down ‘by mistake', US intelligence indicates

    Read more

  • US, European airlines suspend flights to Tel Aviv

    Read more

Citigroup bears brunt of crisis

Latest update : 2008-04-18

Citigroup has become the most battered firm in the subprime financial crisis, reporting first-quarter losses of $5.1 billion. The US banking giant said it would cut some 9,000 jobs, in addition to the 4,200 cuts announced the previous quarter.

US banking giant Citigroup reported Friday a first-quarter net loss of 5.1 billion dollars, hurt by at least 12 billion dollars in write-downs amid soured subprime investments, and said it would cut an additional 9,000 jobs.
  
Earnings per share were a negative 1.02 dollars, seven cents steeper than the loss that most analysts' forecast.
  
It was the second consecutive quarterly loss for the banking titan, hammered by the subprime, or high-risk, mortgage crisis stemming from the worst US housing slump in decades and signs of recession in the world's biggest economy.
  
Citigroup is now the US bank hardest hit by the subprime crisis that erupted in August, wreaking havoc on financial markets and leading to a credit squeeze that is stifling growth in the global economy.
  
The bank has taken more than 30 billion dollars in write-downs, more than peer Merrill Lynch, which reported Thursday a net loss of two billion dollars and write-downs of up to nine billion dollars.
  
Citigroup said the first-quarter net loss was mainly driven by fixed-income results and higher consumer credit costs.
  
Citigroup took six billion dollars in pre-tax write-downs and credit costs on subprime-related direct exposures, 3.1 billion dollars on funded and unfunded highly leveraged finance commitments, a downward credit value adjustment of 1.5 billion dollars related to exposure to monoline, or municipal bond, insurers, and 1.5 billion dollars on auction rate securities inventory.
  
It also reported a 3.1-billion-dollar increase in credit costs in its global consumer business, including a loss of 1.7 billion dollars and a reserve for bad loans of 1.3 billion dollars.
  
Vikram Pandit, Citi chief executive, said the financial results "reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions."
  
Pandit said that during the first quarter, valuations of the bank's subprime-related exposures in fixed-income markets and leveraged finance assets had further declined and credit costs in its consumer lending businesses had increased.
  
"Despite the negative factors in the broader markets, we continue to see strong momentum throughout the organization with robust volumes in many of our products and regions," he said.
  
"We have taken decisive and significant actions to strengthen our balance sheet, including over 30 billion dollars of capital raised during December and January," he said.
  
Pandit noted that the bank recently reorganized its businesses along regional and product lines.
  
"As we move into the second quarter and beyond, we will continue to divest non-strategic assets and allocate capital to the products and regions that will drive increased revenues, enhance the value of our franchise, and ultimately, maximize shareholder value," he said.
  
Citigroup chief financial officer Gary Crittenden said in a conference call that a decline in expenses during the first quarter, included an expected reduction of 9,000 jobs.
  
Crittenden said the expected cuts are in addition to the 4,200 workforce reduction announced in the previous quarter.
  
Citigroup announced in January a fourth-quarter net loss of 9.83 billion dollars, dragged down by soured mortgage investments.
  
Investors cheered the first-quarter earnings report "on the notion that the worst of the bank's problems are behind it," said Patrick O'Hare, an analyst at Briefing.com.
  
"The report from Citigroup has been met with a sigh of relief as the banking giant fell short of consensus estimates by 'only' seven cents and reported first-quarter write-downs of 'only' 12 billion dollars," he said.

Date created : 2008-04-18

COMMENT(S)