Citigroup Posts Results and Revamp

The stunning net loss of $9.83 billion reported for the fourth quarter by Citigroup Inc. (Citi) January 15, after writing down $18.1 billion in subprime and consumer credit exposures, underscores the depth and breadth of the credit and mortgage crisis. Although for the full year 2007 the corporation made a net $3.6 billion, that full year result was down 83% from the net $21.5 billion Citi made for 2006. After the $18.1 billion write down, Citi still has total "net CDO Super Senior exposures and gross Lending & Structuring exposures" of $37.3 billion as of December 31, down from $54.6 billion on September 30.

Citi separately announced several steps it is taking to shore up its capital base, which include cutting its quarterly dividend to $0.32 per share (or $1.28 annually), from $0.54 per share (or $2.16 annually); a public offering of $2 billion convertible securities, plus "additional" preferred shares; a private placement of $12.5 billion in convertible preferred securities; and the corporation says it will continue selling "non-core assets," according to the announcement.

Of the $12.5 billion private placement of convertible preferred securities, which carry a 7% dividend, $6.88 billion was sold to a group of investors that includes: "the Government of Singapore Investment Corporation Pte Ltd," and "Capital Research Global Investors; Capital World Investors; the Kuwait Investment Authority; the New Jersey Division of Investment; HRH Prince Alwaleed bin Talal bin Abdulaziz Alsaud; and Sanford I. Weill and The Weill Family Foundation."