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Citi Posts $8.3B Loss, Prepares to Split in Two

Still smarting from bad mortgage bets, the company will split to remain solvent

By Clay Dillow,  Newser Staff

Posted Jan 16, 2009 7:52 AM CST
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(Newser) – Citigroup lost $8.29 billion in the fourth quarter—twice as much as expected—as the credit crisis continues to batter big banks, Bloomberg reports. The bank suffered a net loss of $1.72 per share, falling far short of analysts’ estimates. Citigroup, which lost 77 percent of its trading value last year as it accepted $45 billion in bailout funds, now looks to split into two entities.

Citigroup will move units it wishes to keep, such as branch banking, corporate lending, and private banking, into a business called Citicorp, while “non-core” units such as CitiFinancial, brokerage, and retail asset management will collect under the umbrella of Citi Holdings. Citi will continue to shed non-essential units and cut deals to free up cash, such as the pending $21 billion Smith Barney joint venture with Morgan Stanley.

A Citi Smith Barney logo is shown at the bank's office Thursday, Jan. 15, 2009 in New York. Citigroup's CEO Vikram Pandit said Wednesday that the company is going through a long-term transformation.
A Citi Smith Barney logo is shown at the bank's office Thursday, Jan. 15, 2009 in New York. Citigroup's CEO Vikram Pandit said Wednesday that the company is going through a "long-term transformation."   (AP Photo/Mark Lennihan)
Deals with other banks like Morgan Stanley and a sell-off of non-essential firms is the only way Citi can seem to remain solvent.
Deals with other banks like Morgan Stanley and a sell-off of non-essential firms is the only way Citi can seem to remain solvent.   (AP Photo/Richard Drew)
In this Jan. 15, 2008, file photo, the Citigroup Center is shown in New York. Citi reported a fourth quarter loss today.
In this Jan. 15, 2008, file photo, the Citigroup Center is shown in New York. Citi reported a fourth quarter loss today.   (AP Photo)
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COMMENTS
Showing 2 of 2 comments
muleskinner
Jan 15, 2009 10:14 PM CST
are you kidding, what do you call wells fargo and bank of america--one stop shopping--and wells fargo is the worst bank in the world
gilgordan
Jan 15, 2009 8:27 PM CST
The great experiment of "all in one stop" banking: personal to business banking, insurance, investment and other ventures unknown to common financial sense is now officially over. Praise God! what started in 70's and grew to a global ponzi scheme with contributions by governments, zealot capitalist(deregulators),and those charge with protecting the economic future of their citizens has collapsed. The global economy grew based on "smoke and mirrors" and like the Pillsbury dough boy grew outside its skin with no value to support it. Contracts drawn and written in country and out of country must now be written down with the expectation that each citizen must honor 100% of there obligation while those creating the problem get relief. Is this fair and just for the citizens not responsible? NO. Each individual should stand up now and say enough is enough. If you have debt contracts, reduce them by 50%, if you have excessive or risked based pricing, set a rate of 5% as fair and start paying each creditor that amount. If you owe the government taxes pay a fair share. This is a just solution to an unjust economic circumstance individuals have been placed in. Those having no contracts but have suffered investment or retirement losses in accounts should demand guarantees from your government similar to the financial institutions that are now getting favorable treatment. It is time to retake control of our circumstances and demand action from our local and national elected leadership or promise them unemployment at the next opportunity. There is a lot of change to be made, but it starts with each of us to make it happen. Let get it on.

Smith Barney venture may experience competition from 'breakaways'
Bloomberg

BofA also posts quarterly loss
Wall Street Journal

 
Citigroup • Morgan Stanley • earnings reports • quarterly reports • stock price • bailout • Smith Barney

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