ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Tuesday, January 15, 2008

Citigroup ne Citicorp Meltdown Update

Still not worried? Perhaps we should be.

AP - Citigroup May Cut Thousands of Jobs Tuesday
January 15, 8:01 am ET

Citigroup Is Expected to Announce Thousands of Job Cuts After Posting Dismal

NEW YORK (AP) -- Citigroup Inc. is expected to announce thousands of
job cuts after posting dismal results for the fourth quarter, when the bank's
mortgage-riddled portfolio lost billions of dollars in value.

Citigroup swung to a loss of nearly $10 billion in the fourth quarter as it took a
write-down of $18.1 billion for bad bets related to the mortgage industry, the
bank said on Tuesday.

On the hunt for cash, the nation's largest bank said Tuesday it also got a $12.5 billion investment from outside investors, including $6.88 billion from the Government of Singapore Investment Corp.

Other investors were Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of Investment, shareholder Prince Alwaleed bin Talal of Saudi Arabia and former chief executive Sanford Weill and his family foundation. Citigroup also took a net charge of $3.31
billion for loan-loss reserves in its U.S. consumer credit business-- primarily
for delinquencies on mortgages, credit cards and auto loans. A year earlier it
reversed $127 million in loan-loss reserves. Citi cited increasing signs of
weakness among the consumer -- something many others have pointed to as a
potential indicator of a recession.

Fourth-quarter losses totaled $9.83 billion, or $1.99 per share, compared with earnings of $5.13 billion, or $1.03 per share, during the same quarter in 2006. Citigroup's revenue fell to $7.22 billion in the fourth quarter, down 70 percent from $23.83 billion generated during the final quarter of 2006.

Analysts polled by Thomson Financial, on average, forecast a loss of $1.03 per share for the quarter on revenue of $10.64 billion. The biggest loss estimate for the quarter was for a loss of $1.43 per share, while the lowest revenue estimate was for $6.47 billion.

Citigroup was hit hard for the second straight quarter by rising delinquencies and
defaults in the mortgage market -- especially among subprime loans given to
customers with poor credit history. The New York-based bank cut the value of
bonds and debt backed by the troubled loans by $18.1 billion. During the third
quarter, Citigroup took about $6 billion in write-downs.

It was not all bad news for Citigroup, though, as the bank recorded record results in its international consumer, transaction services and wealth management segments.
International consumer revenue increased 45 percent, due to a 21 percent
year-over-year increase in average deposits and a 30 percent jump in loan
volume. Citigroup's international consumer unit also benefited from a $507
million pretax gain on Visa Inc. shares and a $313 million gain on the sale of
Nikko Cordial's Simplex Investment Advisors.

Transaction services revenue increased to a record $2.29 billion, driven by growing customer volume. For the full year, Citigroup posted net income of $3.62 billion, or 72 cents per share.

As part of a plan to boost capital on its balance sheet after the
fourth-quarter losses, Citigroup said it raised $12.5 billion in new cash from
outside investors, including $6.88 billion from the Government of Singapore
Investment Corp. Citigroup also cut its quarterly dividend to 32 cents per
share from 54 cents per share to save money. Shares of Citigroup fell 85
cents, or 2.9 percent, to $28.21 in premarket trading from a $29.06 close

Your Co-Conspirator,
ARC: MontereyJohn

Comments (4) said...

Someone needs to say something about this! IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! see it with YOUR OWN EYES!

Monterey John said...


Brian said...

Sounds like spam to me.. What say all of you? Shall we delete?

Monterey John said...

Sounds good to me.