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Apr-20-2008

Citigroup May Need to Sell Assets to Bolster Capital (Update1)

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CONTENTS:

Citigroup reported a net loss of $5.1 billion or $1.02 per share, $0.07 per share worse than consensus analyst expectations, according to Thomson Financial. (More...)
Under Prince, Citigroup's balance sheet swelled by $689 billion, an amount larger than the entire balance sheet of Wells Fargo & Co., the fifth-biggest U.S. bank. (More...)
The person spoke on the condition of anonymity because of the sensitivity of the negotiations. (More...)
We also had a $250 million reserve to facilitate for global wealth management clients and exit from a specific Citi managed fund and a $200 million write down on the hedge fund intangible assets related to Old Lane. (More...)
On the alt A portfolio, obviously you guys have $22 billion there and looking at the write down of $1 billion, when you compare that to kind of other industry participants who have taken things down to $0.70 on the dollar, it just seems like it'''s a little light. (More...)
Xerox announced March 27 that it received approval to settle a securities lawsuit dating to 2000 and that it would take a $491 million charge related to the settlement. (More...)
Citigroup is now the U.S. 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. (More...)
Last quarter, Citi identified 4,200 jobs for elimination, mostly in investment banking, in addition to the 17,000 identified a year earlier by Prince. (More...)
It is incremental so we announced 4,200 last quarter, we announced 9,000 this quarter. (More...)
Citi said it had concluded the sale of around $12bn in leveraged loans to a conglomerate of private equity groups including Apollo, TPG and Blackstone. (More...)
Another question on capital, what are your thoughts for needing additional capital and I understand that'''s in the context for your outlook for problem assets, you mentioned consumer credit is likely to get worse this year. (More...)
Its only at times like these that you are able to buy an institution like C for $25. (More...)
The Financial Times reported that Pandit said cost cuts will focus "especially in information technology and operations." (More...)
The bank ousted CEO Chuck Prince late last year and promoted Pandit, a former Morgan Stanley investment banker, as it scrambles for cash. (More...)
Citigroup's news is the latest in a wave of dismal bank earnings reports over the past week. (More...)
I wanted to follow up on your discussion of consumer allowance for loan loss compared to the coincident write off rates. (More...)
As a consequence of the capital raising we did in the first quarter, our tier one ratio was 7.7% exceeding our internal target. (More...)
One of Mr Pandit'''s first moves has been to centralise IT decisions in New York under chief administrative officer Don Callahan, a close ally. (More...)
Additional cost reductions are likely to be announced in future quarters, Crittenden said. (More...)

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Citigroup reported a net loss of $5.1 billion or $1.02 per share, $0.07 per share worse than consensus analyst expectations, according to Thomson Financial. Unlike, say, Merrill Lynch, Smith Barney's Global Wealth Management unit (retail brokerage), one of the centerpieces in CEO Vikram Pandit's revival, did poorly too. (Merrill reported earnings yesterday, and despite CDO woes, its retail brokerage did pretty well.) The bank's first quarter results include another $15.2 billion in write-downs, including: $6 billion for direct sub-prime related exposures, $3.1 billion on leveraged finance commitments, $1.5 billion on its auction-rate securities inventory, $1.5 billion related to credit exposure to monoline insurers and a $3.1 billion increase in credit costs in the global-consumer division. This week Pandit rejected talk of a break-up in an interview with Business Week, saying he 'couldn't get a better set of assets.' (That said, Pandit is getting rid of non-core businesses, such as its Diners Club International credit-card network, which it sold last week. Citi announced it would sell its North American commercial-lending and leasing business.) Global-wealth management, which consists of the brokerage Smith Barney and the private bank, saw none of that momentum this quarter. [1] Citigroup, caught in the midst of the housing slowdown and tight credit market, reported a $5.1 billion loss on Friday and announced that it would cut 9,000 more jobs in the next 12 months. The bank's first-quarter results reflected more than $16.9 billion in write-offs and additional loan loss reserves as Vikram S. Pandit moved 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. "We are not happy with our financial results this quarter, although they are not completely unexpected given the assets we hold," Mr. Pandit said Friday on a conference call with investors.[2] JPMorgan and Wells Fargo revealed credit crunch write-offs of $5.1 billion and $2 billion, respectively. Wachovia, America's fourth-biggest bank, kicked off the week by announcing a surprise first-quarter loss after it was forced to take a $4.4 billion writedown on its portfolio of home loans and mortgage-backed securities. Citigroup's latest writedown included a $6.1 billion decline in the value of its sub-prime mortgage bond portfolio and $3.1 billion on loans made to finance private equity deals. It also wrote off $1.5 billion worth of insurance taken out against defaults on its sub-prime bond investments, amid fears that the underwriters would be unable to pay out on some policies. Citigroup took a further $1.5 billion hit on its portfolio of so-called auction rate securities, as the market for such assets dried up in the first quarter. The bank also took a $3.1 billion writedown in its global consumer division as the housing crisis fed through into later car loan and credit card payments.[3] NEW YORK'''Citigroup Inc. says it will eliminate about 9,000 more jobs, after poor bets on defaulting loans and the tumultuous credit markets lopped $14 billion (U.S.) in value from the bank's investments during the first quarter. That writedown, plus more than $3 billion in costs related to consumers' credit problems, led Citigroup to a quarterly loss of $5.1 billion.[4] "The Middle East is one of our last frontiers. No job cuts are likely to be seen in this region while the bank continues with its expansion plans," the executive, who asked not to be named, said. Citigroup, one of America's largest lenders, had said on Friday that it plans to cut 9,000 more jobs worldwide during the second quarter this year, following losses of $5.1 billion during the first quarter. "These (the job cuts) will mainly be in New York, London and Hong Kong," he said, adding that this is mainly due to redundancies while unifying back offices, operations and human resources. Citigroup's investment bank endured about $12 billion in write downs on its exposure to various parts of the credit markets, bringing the division's total losses to about $32 billion since last summer.[5] Citigroup, the owner of the credit card provider Egg, is making the cuts after suffering losses of $5.1 billion (£2.55 billion) in the past three months. The bank, which employs approximately 11,000 staff in Britain, is cutting around 2.5 per cent of its 370,000 staff worldwide. That puts some 300-400 staff at risk at its European headquarters in Canary Wharf, east London, as well as other centres in Britain. The redundancies are unlikely to be the last, after the chief executive, Vikram Pandit, said he expected to cut Citigroup's cost base by as much as a fifth in the coming months. The investment bank is one of the largest victims of the credit crisis to date, and had already cut 4,200 jobs earlier this year. The Citigroup cuts follow those announced by the Swiss investment bank UBS on Thursday. It is shedding 900 jobs at its offices in the City of London.[6] Citi executives, led by Chief Executive Vikram Pandit, just four months on the job, tried to spin the quarter positively Friday. A broad cost-cutting plan is advancing, they said, including the elimination of 9,000 more jobs in the second quarter on top of 4,200 job cuts announced in January and 14,000 cuts in 2007. Citi is reducing the leverage in its investment bank and selling off exposures as it can, they said, as well as shedding tangential businesses, such as its sale of most of its $13 billion commercial lending and leasing business to General Electric (nyse: GE - news - people ), announced Thursday. Much of what remains of the CDO exposure on its books are products of much older production date, which are believed to be less at risk for further losses than derivatives products created in 2006 and 2007.[7] Merrill Lynch said on Thursday it would cut 4,000 jobs after suffering a $2bn first quarter loss, bringing to nearly 40,000 the amount of positions lost at financial companies since the beginning of the credit crunch. More layoffs are unavoidable, with JPMorgan Chase anticipated to eradicate a large majority of Bear Stearns''' 14,000 jobs following its acquisition of the troubled bank. In the interview, Mr Pandit rejected calls for a break-up of Citi, reaffirming his trust in its model of combining retail, commercial and investment banking. He said Citi would strip businesses that do not fit with the rest of the group. Citi announced the sale of its North American commercial lending and leasing business, which has more than $13bn in assets, to General Electric for an unnamed sum. Last week, Citi sold its Diners Club International credit-card network. Outside job cuts, Mr Pandit said one of his key precedences would be reducing Citi'''s information technology budget, which runs into the tens of billions of dollars.[8] Revenues fell 48% to $13.22 billion. "We're not happy with our financial results this quarter," new CEO Vikram Pandit said. He noted his confidence in Citigroup's future is "extremely high." Citi has announced 13,200 job cuts this year, including 4,200 disclosed in January. It said about 1,300 in its investment banking unit lost jobs in the first quarter.[9]

We had $3.7 billion in net credit losses and $1.8 billion in charges to increase our loan loss reserve in the global consumer businesses with the majority of that being driven by the U.S. consumer business. $3.1 billion in write downs on our highly leveraged finance commitments, $1.5 billion in credit market value adjustments related to our monoline exposure, $1.5 billion write down of our inventory of auction rated securities, a $1 billion write down net of hedges on alt A mortgages in the CMB business. Additionally we recorded $622 million in repositioning charges related to this quarter'''s installment of our reengineering plan. This was offset by a $663 million gain from the sale of our Ready Card shares, a $633 million benefit related to the gain on VISA shares and a partial release of previously established VISA related litigation reserves. Revenues included a $1.3 billion gain related to the inclusion of Citi credit spreads in the termination of the market value of those liabilities for which the fair value option was elected. Excluding the write downs and the benefits effecting the market and banking segments listen on this table amounted to $11.8 billion, revenue for the company would have been $25 billion or close to flat versus the prior year period. Turning now to slide number 3, this shows a five quarter trend for some of the key drivers in our business. It'''s encouraging to see that this quarter most of the drivers have continued to grow at a fairly consistent pace with the second quarter of 2007 which was the best quarter in the firm'''s history. Strong momentum continued to cross these drivers, especially in our international franchises.[10] The reengineering plan for 2008 is well underway and we'''re very focused on managing expense levels in the company. The cost of credit more than doubled over last year primarily due to higher net credit losses and a subsequent change to the increase in loan loss reserves, both principally in our U.S. consumer business. These factors drove a loss of $5.1 billion for the quarter or a loss per share of $1.02. This EPS is based on a basic share count of 5.1 billion shares.[10]

Or at least that's what many investors think. Citigroup shares rallied more than 6% on Friday after the bank reported a first-quarter loss of $5.1 billion, stemming from asset write-downs of nearly $14 billion as well as mounting losses from consumer products such as credit-card and home-equity loans. While the results were hardly good news, investors and analysts seemed pleased that they didn't include any unpleasant surprises, as has been the case in prior quarters.[11] Citi Chief Financial Officer Gary Crittenden admitted in a conference call Friday that despite the bank's efforts to stay ahead of the situation, "this cycle could be particularly difficult." Citi doubled its provision for loan losses in the quarter to $5.7 billion, from $2.7 billion in the first quarter last year, and Crittenden said the bank was "comfortable" with current loss reserves. He added, "we could face significant head winds as we go through the rest of the year." The first quarter loss of $5.1 billion was wider than already-low expectations, and about equal with its profits in the first quarter last year. Citi took more than $12 billion in writedowns related to subprime mortgage exposure, collateralized debt obligations, leveraged loans and the like in the quarter, but still has $23 billion worth of CDOs on its books and another $47 billion of assets from structured investment vehicles it was forced to bring back on its balance sheet last year when it couldn't find buyers.[7] Citigroup has been one of the hardest-hit firms in the wake of the turmoil in the markets and the economy. In January, the bank reported a $9.83 billion loss for the fourth quarter, the largest quarterly loss in the firm'''s history, after it wrote down $18.1 billion of its subprime mortgage holdings. It was forced to raise more than $30 billion in capital in December and January, including from sovereign wealth funds, and cut its dividend by 41 percent. Citigroup continued to write-down its various debt holdings and exposures for the first quarter. Its $9.2 billion in write-downs included a $6 billion charge related to its subprime holdings; a $3.1 billion write-down tied to leveraged loans, or those meant to finance private equity deals; and a $1.5 billion "downward credit adjustment" of its exposure to bond insurers, whose failing financial health has led to a reduction in the value of Citigroup's mortgage holdings.[12] Write-downs in the first quarter were $4 billion less than the fourth quarter's $18.1 billion. With significant exposure to problematic mortgages and leveraged loans still on its books, Citigroup remains at risk for more write-downs. Fitch Ratings downgraded the bank's credit rating Friday, and Moody's Investors Services and Standard & Poor's Ratings Services took actions that indicated Citigroup might be downgraded if the assets on its books deteriorate. Echoing other banks that have reported financial results this week, Citigroup said it faces a deteriorating environment for consumer lending.[13] The woes of the American banking sector deepened again yesterday as Citigroup, the largest bank in the United States by assets, reported a loss of $5.11bn (£2.56bn) in the first quarter of this year and announced that it was shedding a further 9,000 jobs. Suffering like many of its rivals from disastrous bets placed on mortgages and leveraged loans before the full wrath of the credit crisis took hold, Citigroup was damaged by $16bn in writedowns. This follows $18.1bn in asset writedowns in the fourth quarter of last year. While the loss was slightly higher than some had expected, Wall Street seemed to welcome the adjustments being made at Citigroup, sending its shares 4.5 per cent higher.[14] The company lost $1.02 per share, compared to a net income in the first quarter of last year of $1.01 per share. The results, said its chief executive, Vikram Pandit, show "the continuation of the unprecedented market and credit environment". In recent weeks, Citigroup has moved to sell its Diners Club International credit card network as well as other businesses in leasing and commercial lending. The results were at least less grim than those of the last quarter of last year when the bank reported losses of almost $10bn. "This is the quarter they get to clear the decks," said Arthur Hogan, the chief market analyst at Jefferies & Co in Boston. "Vikram Pandit is coming in and making pretty big changes, and that's what he gets to do. It's a cathartic quarter."[14] Citigroup's alternative-investment division, which Pandit used to run, reported a net loss of $509 million. The bank said today it will offer investors the chance to seek redemptions from its Old Lane multistrategy hedge fund, citing the "change in management'' since Pandit was promoted to CEO. The company benefited in the quarter from a $633 million gain on its stake in Visa Inc., which went public in an initial stock offering in March, and a $663 million gain on the sale of shares in Redecard SA, a Brazilian credit-card transaction processor. Citigroup's writedowns and credit losses from the collapse of the subprime mortgage market now total almost $40 billion, more than those reported by Zurich-based UBS AG and Merrill.[15]

"We are in uncharted territory." Despite stockpiling more than $30 billion in capital in recent months, and repeated assurances from executives that Citigroup has a plethora of capital, Mr. Crittenden said in an interview he couldn't rule out the possibilities that Citigroup will raise more money or that the board will further cut the firm's dividend. In three families of hedge funds, Citigroup this year has either had to inject its own capital to stabilize the funds or barred investors from withdrawing their money. All three fund groups have struggled to stay afloat due to their overexposure to the credit markets. Losses in those funds infuriated Citigroup brokers, who have been bombarding Ms. Krawcheck and Edward Kelly, the new head of Citigroup's alternative-investments unit, with angry missives. The wealth group also set aside $250 million in the first quarter to help clients liquidate their positions in Citigroup's Falcon fund group, which was burned by big bets on some of the hardest-hit areas of the credit markets.[16] Pandit, who became CEO in December after Charles Prince was ousted amid the bank's ballooning losses, said the financial results "reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions." Pandit noted that the bank recently reorganized its businesses along regional and product lines and would continue to divest non-strategic assets and reallocate capital. He recalled 30 billion dollars of capital had been raised during December and January to strengthen its balance sheet. Citigroup CFO Crittenden said in the conference call that 9,000 jobs would be cut in the first quarter, most of them in its retail banking arm, and in addition to the 4,200 workforce reductions announced in the previous quarter.[17] 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.[18]

NEW YORK (AFP) — U.S. banking giant Citigroup reported Friday a 5.1 billion dollars net loss during the first quarter and said it would cut an additional 9,000 jobs as it struggles with bad bets on subprime mortgages. It was the second consecutive quarterly loss for the banking titan, heavily exposed to the subprime, or high-risk, mortgage crisis stemming from the worst U.S. housing slump in decades and signs of recession in the world's biggest economy. The first-quarter loss was almost half the prior quarter's loss of 9.83 billion dollars, and coupled with cost-cutting measures such as job cuts Citigroup Inc., under its new chief executive Vikram Pandit, appears to be putting the credit crisis behind it, analysts said.[17] Citigroup's Cathartic Quarter. After posting its second straight loss, Citigroup announced 9,000 job cuts. Citigroup Inc posted its second straight quarterly loss on Friday, hurt by more than $16 billion of write-downs and costs related to credit losses, and said it will cut another 9,000 jobs. "It's a cathartic quarter," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston.[16] The credit crunch took a further toll on Citigroup yesterday as America's largest bank announced an extra $15.2 billion (£7.6 billion) hit and said that it would cut another 9,000 jobs worldwide. The bank's latest writedown gave it an overall loss of $5.11 billion for the first quarter and took its total hit from the credit crisis to $33 billion over the past nine months. The 9,000 job cuts are much higher than the 1,800 redundancies expected in this round of layoffs and are on top of about 21,000 cuts made globally in the past year.[3] Citigroup Inc, the largest U.S. bank by assets, announced a $5.1 billion first quarter loss along with more than $12 billion in writedowns linked the struggling mortgage and credit markets. Get stories by e-mail on this topic.[19] April 19 (Bloomberg) -- Citigroup Inc. shareholders, cheered by a $5.1 billion first-quarter loss that wasn't as big as some analysts forecast, face growing concern that the bank may have to sell assets, reduce the dividend and attract outside investment to bolster capital. Citigroup's so-called Tier 1 capital ratio -- a measure of its ability to withstand loan losses -- fell to 7.7 percent at the end of March, the New York-based bank said yesterday. Citigroup says it needs a 7.5 percent ratio to provide a margin of safety and preserve its credit ratings.[20] Created a decade ago from the merger of Citicorp and Travelers Group Inc., Citigroup slumped 54 percent in New York trading during the past year as credit-market losses piled up. The decline led to the ouster of the 58-year-old Prince, who served as CEO for four years, as Citigroup's market value fell below those of Bank of America Corp. and JPMorgan. New York-based JPMorgan reported first-quarter earnings earlier this week of $2.37 billion, matching analysts' estimates. Pandit, 51, is close to the end of a six-month companywide review that has taken him to offices in Warsaw, Istanbul and Seoul. He also is taking steps to free up additional capital by selling assets such as $12 billion of leveraged-buyout loans and announcing a plan to pare U.S. mortgage holdings by $45 billion this year.[15] Pandit, who took charge in December, is battling to return the bank to profitability and halt a 55 percent drop in market value in the past year that was triggered by $21.4 billion of writedowns. The former Morgan Stanley executive bailed out 10 investment funds, replaced his chief risk officer and raised $30 billion to contain fallout from the subprime mortgage collapse. "Pandit is doing what needs to be done, focusing on capital management, allocating capital to areas that he wants to grow and exiting businesses that he doesn't think are core,'' said Peter Kovalski, portfolio manager at Alpine Woods Investments in Purchase, New York, which oversees $12 billion, including about 32,000 Citigroup shares. "The variable he has no control over is the global economy, and how much further deterioration there's going to be.'' Citigroup rose 4.6 percent to $25.14 by 11:07 a.m. in Frankfurt today from its closing price of $24.03 in New York Stock Exchange composite trading yesterday.[21]

The writedowns burned through much of the $30 billion of capital Citigroup has raised since late last year, leaving it vulnerable to further charges and loan-loss provisions. "We're in a recession, they have a huge consumer book, and there's huge double-digit-billion provisions that they're going to have to take in the next 18 months to two years,'' CreditSights Inc. analyst David Hendler said. "They're undercapitalized for their risk.'' A weakening U.S. economy and rising consumer delinquencies have forced Chief Executive Officer Vikram Pandit and Chief Financial Officer Gary Crittenden to back away from assurances earlier this year that the bank didn't need to raise more capital. In January, Crittenden said Citigroup "stress-tested'' its assumptions under "multiple recessionary scenarios.''[20] Chief Executive Vikram Pandit is trying to focus on stronger businesses after years of underinvestment and questionable risk management left Citigroup bearing the full brunt of the credit market crisis. The bank has slashed its dividend and raised more than $30 billion in capital.[22]

The 41 percent reduction allowed the bank to retain about $4.4 billion of additional capital per year. Citigroup may soon have to cut its dividend again, according to Whitney, who was one of the first analysts last year to predict the depth of the credit crisis. "This is a difficult business environment,'' Crittenden said on the conference call.[15] Mr Hurley said the Central Bank and the Financial Regulator have regularly stress-tested the Irish banking sector and found that it can weather a significant slowdown. Yesterday's news that 9,000 jobs are to be cut from Citibank's global operations, after it made a loss of $5.1 billion (3.2 billion) in the first three months of the year, was seen by the markets as a sign that an end to the credit crunch may be in sight as banks own up to the full extent of the bad loans on their books.[23] Citigroup reported a $5.1 billion loss for its first quarter, its second consecutive quarterly loss, after the banking giant took a $15.2 billion charge as its mortgage and loan holdings declined in value and it prepared for higher consumer credit costs.[12] Citi announced on Friday that it lost $5.1 billion during the first quarter as a result of nearly $14 billion in asset write-downs that stem from high delinquencies in subprime mortgage and consumer loans.[24]

Revenues fell 48% in the quarter, to $13.2 billion, due to all the writedowns. Even hypothetically adding those writedowns back, revenues would have been about even with the first quarter last year, suggesting the economic slump is taking a bite out of Citi's business regardless of its own problems with over-leverage. Of the writedowns in the quarter, Citi took $6 billion related to subprime mortgages, $3.1 billion for its leveraged loan exposure, $1.5 billion related to bond insurers, and $1.5 billion in its holdings of auction-rate securities. It also wrote down of $1 billion on alt-A mortgages and another $600 million for commercial real estate.[7] Keller said that the worst of Citi's financial troubles might be over because some Wall Street analysts are recommending the stock as a buy. In the first quarter, Citigroup took $622 million in repositioning charges related to a several activities, such as branch closings and headcount reductions, Tarter said. Citigroup's financial troubles have stemmed largely from poor bets on mortgages and leveraged loans that have lopped billions of dollars from its investment portfolio.[25]

For the first quarter the blue bar represents assets subject to fair value assessments, including a $2 billion portfolio available for sale securities and a $2.3 billion trading portfolio in the alternative investments business. Excluding interest earnings we recorded almost $600 million of write down net of hedges on this portfolio. The second category represented by the green bar is loan commitments of approximately $21 billion which are reserved to the extent necessary and our loan loss reserves for unfunded commitments.[10] In the U.S. retail distribution, net credit losses were higher by $228 million reflecting higher losses in personal finance, sales finance and home equity portfolios. Second as shown on the chart, the loan loss reserve build was higher this quarter versus the prior year by $1.4 billion.[10]

"We're kind of at the beginning of the cycle" in seeing losses from credit- card loans, said Gary Crittenden, Citigroup's chief financial officer, in an interview on Friday. Across all its consumer-loan portfolios - including mortgages, home-equity loans, auto loans, and credit cards - Citigroup incurred $3.8 billion in net credit losses. It said it has set aside another $1.9 billion to account for future anticipated losses. Citigroup also continues to see lackluster performance from its Old Lane hedge-fund unit, a business that has struggled since the mortgage crisis began.[11] Profits in all four of Citigroup's main business lines fell sharply from a year ago, and executives warned that the tough times are likely to drag into next year. Citigroup's investment bank endured about $12 billion in write-downs on its exposure to various parts of the credit markets, bringing the division's total losses to about $32 billion since last summer.[16] LONDON, April 18 (Reuters) - European stocks extended their gains around midday on Friday, reaching a one-week high as investors seemed relieved by Citigroup's (C.N: Quote, Profile, Research ) first-quarter results. Citigroup, the largest U.S. bank, posted its second straight quarterly loss totalling $5.11 billion, hurt by debt write-downs and mounting credit losses. "It all looks better, revenues are $2 billion ahead, the stock is up 5 percent because it looks like the write-downs are $6 to $7.5 billion," said one London-based trader.[26] NEW YORK (Reuters) - Citigroup Inc, the largest U.S. bank, on Friday posted its second straight quarterly loss, hurt by more than $15 billion in write-downs and increased reserves for credit losses.[22]

The bank wrote down the value of assets it absorbed last year from so-called structured investment vehicles by $212 million and marked down the value of bond insurance contracts by $1.5 billion. While the writedowns stuck Citigroup's trading and investment-banking division with a loss for the period, revenue climbed by 16 percent in both the consumer and wealth-management businesses.[15] Revenue came in at $13.2 billion, ahead of the $12.8 billion that analysts had expected. Citigroup has also been raising capital, including a $7.5 billion infusion from the Abu Dhabi Investment Authority last year and cash from other sources this year, Citi has divested peripheral assets such as the Diner's Club network and its leasing division in an effort to shunt capital to its core business.Investors seem to feel that these moves will be sufficient to return the bank to profitability.[27]

We do have an ongoing plan to continue to reduce assets, so we announced about three weeks ago that we expected the mortgage business to have a roll off of assets of about $45 billion over the next 12 months and we'''re continuing to manage other non-core assets very aggressively, the legacy loans sale that we announced last night is a good example of that. We continue to manage those non legacy assets very aggressively and that will generate capital. Additionally we'''ve had three major transactions this quarter, the Ready Card transaction and the Diner'''s Club transaction and now the Citi Capital transaction with GE that we announced yesterday. I think a good way to think about that is that that is the pace that we expect to continue through the remainder of this year, obviously those things take time but we don'''t anticipate reducing the pace of those kinds of divestitures during the year.[10] The shift is part of Mr Pandit'''s efforts to reduce Citi'''s exposure to riskier assets but Mr Crittenden indicated that further sales of leveraged loans were improbable unless prices improved from current low levels. Citi'''s writedowns included $6bn related to subprime mortgages, $3.1bn on leveraged loans, $1.5bn on its exposure to monoline bond insurers and $1.5bn on auction rate securities. Citi also said it saw a $3.1bn rise in credit costs in its global consumer business and was required to take a $200m writedown on a hedge fund founded by Mr Pandit. Under the conditions of the fund, Mr Pandit'''s promotion to group chief executive in December allowed investors to ask for their money back.[28] Revenue fell 48% to $13.22 billion. They took $6 billion of pretax write-downs and credit costs on sub-prime loans. The firm also announced write-downs of $3.1 billion on funded and unfunded highly leveraged finance commitments, a downward credit value adjustment of $1.5 billion related to exposure to monoline insurers, write-downs of $1.5 billion on auction rate securities inventory, and a $3.1 billion increase in credit costs in its global consumer business. Citi also said they have already sold $4 billion in leveraged loans in April.[29] Results included $6 billion in write-downs and credit costs tied to subprime mortgages, $3.1 billion in write-downs for loans to fund corporate buyouts, and a $3.1 billion increase in credit costs related to consumer lending. The company also wrote down $1.5 billion of its exposure to bond insurers and $1.5 billion for auction-rate securities.[22] The latest results included $6 billion in write-downs and credit costs on subprime-related exposures, $3.1 billion on leveraged loans, $1.6 billion on Alt-A mortgages and commercial real estate and $1.5 billion each on auction-rate securities and Citi's exposure to monoline insurers.[30]

Citigroup has lost close to $15 billion in the last two quarters, and has suffered more than $46 billion in write-downs and increased credit costs since the middle of 2007. The bank has also slashed its dividend and raised more than $30 billion in capital. It ended March with a Tier-1 capital ratio of 7.7 percent, up from 7.12 percent at year-end, and above the 6 percent that regulators deem "well-capitalized."[16]

The bank's write-downs, plus more than $3 billion in costs related to consumers' credit problems, led it to report a first-quarter loss Friday of $5.1 billion, or $1.02 a share. Sens. Barack Obama and Hillary Rodham Clinton are both sustaining dents and dings from their lengthy presidential fight. The former first lady is clearly suffering more as Democratic voters no longer see her as the party's strongest contender for the White House.[31] The bank's first-quarter loss came as write-downs related to mortgages and turmoil in the credit markets reached about $12.0 billion, and costs stemming from consumers' credit problems surpassed $3.0 billion, the bank said Friday. "The consumer is being pinched--it's not just homes," said Byron MacLeod, an earnings quality analyst with Gradient Analytics.[27]

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.[2] Revenue slumped 48 percent, to $13.22 billion. The bank took $12.1 billion in write-downs: $6 billion on investments related to subprime mortgages, $3.1 billion on leveraged loans, $1.5 on its exposure to bond insurers, and $1.5 billion on its inventory of auction-rate securities.[32]

Total revenues in GWM were $3.2 billion, a 16-percent increase from the same time last year; however, net income for the division was $299 million, a 33-percent drop from the first quarter of last year. Smith Barney, which normally accounts for roughly two-thirds of those earnings, saw net income drop 56 percent to $142 million in the first quarter; by contrast, the private bank contributed $157 million, a 27-percent increase from the year-ago quarter.[1] Total client assets in Smith Barney were nearly $1.5 trillion, an increase of 16 percent over the first quarter of last year. In a worrisome sign, clients withdrew $1 billion net from Smith Barney in the quarter. (By contrast, Merrill gathered $4 billion in net new client assets in its first quarter.) That's in sharp contrast to last year's first quarter, when Smith Barney enjoyed a net $7-billion inflow.[1]

Citigroup's first-quarter report culminates one of Wall Street's worst weeks ever, as bank after bank reported grim news. JPMorgan took $5.1 billion in write-downs and provisions for the first quarter, bringing its total this year to about $10 billion.[2] The global credit crisis took a further toll on the financial industry on Friday, with Citigroup announcing a $5.1 billion loss in the first quarter and the Royal Bank of Scotland preparing to announce a rights issue next week.[33] There was little to smile about at Citigroup's Park Avenue headquarters this morning as the country's largest bank reported a net loss of $5.1 billion for the first quarter of 2008.[34]

Citigroup, which wrote down $18.1 billion in assets in the fourth quarter, reported a net loss of $5.11 billion, or $1.02 a share, for the first quarter, compared with year-earlier net income of $5.01 billion, or $1.01 a share.[30] Citigroup's alternative-investments unit posted a loss in the first quarter as the New York-based bank took a $202 million pre-tax writedown on Old Lane. Citigroup acquired Pandit's company for about $800 million in July. 'It is ironic,' said Geoff Bobroff, president of Bobroff Consulting Inc in East Greenwich, Rhode Island, which provides consulting services to asset managers.[35] Cuts in operating expenses could come from workforce reductions. - Labour news from UNI global union - for trade unions in a global services economy. - Content (Everyone): Analysts predict that the giant American bank will axe around 25,000 jobs in the next few months. Other key priorities for Pandit is decreasing the bank's IT budget and focusing on core businesses. Other banks have announced or are expected to announce job losses. Merrill Lynch will cut 4,000 jobs after its $2bn loss in the first quarter. This brings to nearly 40,000 the number of job cut in the financial industry since the beginning of the crisis.[36] Citigroup underlined the predicament of financial firms squeezed by the credit crunch and the slowing U.S. economy on Friday by announcing a $5.1bn quarterly loss, nearly $16bn in writedowns and 9,000 job cuts. However its shares rallied in New York, rising 4.5 per cent to end Friday'''s session at $25.11, in the midst of investors''' hopes that it had absorbed the biggest blows from the crisis and was moving to cut costs and minimize its balance sheet.[28]

Analysts, on average, had expected the New York bank to lose 95 cents per share, according to a Thomson Financial survey. "We're not happy with our financial results this quarter — although they're not completely unexpected, given the assets we hold," Pandit said. With its significant exposure to problematic mortgages and leveraged loans, Citigroup remains at risk for further write-downs. Fitch Ratings downgraded the bank's credit rating, while Moody's Investors Services and Standard & Poor's Ratings Services took actions that indicated Citigroup might be downgraded in the future, if the assets on its books deteriorate.[37] CEO Vikram Pandit, in a company statement, said the "unprecedented market and credit environment" weighed on the company's earnings, but the bank sees "strong momentum throughout the organization." "To start with, we're not happy with our financial results this quarter, although they're not completely unexpected given the assets we hold," Pandit later said on the conference call. "Through all of this, even as we expect economic news to be challenging, my confidence in this company's abilities and our future is extremely high," he said later.[38]

Although the bank will not be carrying out the kind of headline-grabbing lay-offs it has done in the past - it announced a 5pc cull of all staff just last year - Mr Crittenden said it would be a consistent effort "quarter after quarter". The bank's focus on cost is part of its plan to return to profitability, after $15bn of losses in the last two quarters and taking $46bn of writedowns and charges since last summer. Mr Pandit said he was "not happy with our financial results this quarter" but remained confident about the bank's future.[39]

Financial results include $6 billion in pre-tax write-downs and credit costs on sub-prime related direct exposure costs. According to Crittenden, Tarter says, Citi took $622 million in repositioning charges related to a number of activities, such as headcount reductions and branch closings, including an expected reduction in force of over 9,000 over the next year.[40] Take, for example, the headline write-down number of $6 billion. Nice headline, but if you look through all the numbers and add them up the total write-downs are actually $15 billion. It gets worse. The company states that 'revenues included a $1.3 billion gain related to the inclusion of Citi's credit spreads in the determination of the market value of those liabilities for which the fair value option was elected.' In other words (words which bulls don't like to pay attention to), because the market based price of their bonds fell it reduced the value of their liabilities. By the fact that their credit became worse they are allowed to show an actual gain to earnings. I know it makes no sense that when a financial company's financial condition worsens they are somehow able to show a gain in earnings because of it, but don't complain to me. You'll have to take it up with Citi's CFO. The bottom line is this: The U.S.' major banks are barely holding on to life itself. Citi's financial condition will keep them from making money for a long time even if they do not bust. As speculators pile into the financial stocks again, maybe they should sharpen their pencils a little more.[16] For Citigroup, the largest U.S. bank, it was the second straight quarterly loss; it has suffered from more than $15 billion in write-downs and increased reserves for credit losses.[33] Shares rose on U.S. and European markets after the bank announced it had written off $15.2 billion on credit crunch-related losses, and on risky assets.[23] Pandit added: We have taken decisive and significant actions to strengthen our balance sheet, including over $30 billion of capital raised during December and January, a significant increase in our credit reserves, the sale of Redecard shares, the recently announced divestitures of CitiCapital and Diners Club International, and the realignment of and pending asset reductions in our mortgage business.[27]

With Citigroup, Pandit is trying to prune a sprawling global giant that was created a decade ago by the merger of Citicorp and Sandy Weill's Travelers. As Jesse Eisinger detailed in Condé Nast Portfolio, the bank has staggered under its own weight, suffering from high costs, a lack of coordination among operations, and underinvestment in technology and businesses. Since taking over in December, Pandit has been reviewing the bank's operations and has already moved to cut back its holdings of leveraged loans and its mortgage exposure. The bank has raised more than $30 billion in capital and has cut its dividend.[32] Pandit, succeeded Charles O 'Chuck' Prince as CEO five months ago. Pandit unveiled plans to cut 9,000 jobs as Citigroup posted a $5.11 billion first-quarter loss, its second unprofitable quarter in a row, amid almost $16 billion of trading writedowns and increased bad loan reserves.[35] The local impact of the announced job cuts was not immediately known. Vikram Pandit, Citigroup's CEO, announced a $5 billion first-quarter loss on Friday morning, largely caused by write downs in its investment banking operations. Pandit said he was not happy with the company's performance and that it would focus on its stronger businesses.[41]

Citigroup CEO Vikram Pandit wasn't happy with first-quarter results his firm put out on Friday. No wonder: They included a $5.1billion net loss, $15 billion in new write-downs and costs as well as a 48% drop in revenue.[42] Citigroup Inc. (C) swung to a first-quarter loss as it booked more than $13 billion in write-downs amid surging credit costs, results that "reflect the continuation of the unprecedented market and credit environment."[30] Citigroup said that before taxes, it took $6.0 billion in write-downs and credit costs on exposure to subprime mortgages; $3.1 billion in write-downs on risky loans; a downward credit value adjustment of $1.5 billion related to exposure to bond insurers; $1.5 billion in write-downs on auction-rate securities; and a $3.1 billion rise in credit costs for consumers around the world.[27] 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.[18]

The loss for the period was $5.1 billion, or $1.02 a share, including $12 billion in pretax writedowns and a $3.1 billion increase in credit costs in the global consumer business.[38]

Citi is also accounting for an increase of $3.1 billion in credit costs tied to consumer lending. "This is the quarter they get to clear the decks," Arthur Hogan, chief market analyst at Jefferies & Co., told Reuters. "Vikram Pandit is coming in and making pretty big changes, and that's what he gets to do. It's a cathartic quarter."[32] Credit costs doubled to $6 billion as net credit losses more than doubled to $3.8 billion and Citi added $1.9 billion to loan loss reserves.[30] The fall was driven largely by increased credit costs, including 23 percent higher net credit losses and a $302 million charge to increase loan loss reserves. Its consumer banking revenues grew 9 percent, driven by higher average loans and deposits, up 24 percent and 5 percent, respectively.[41] Net income declined 74 percent, primarily due to higher credit costs, including higher net credit losses and a $362 million charge to increase loan loss reserves.[41]

The total cost of credit increased by $3 billion with $1.7 billion driven by higher net credit losses and $1.4 billion driven by incremental loan loss reserves.[10]

These are both, they cover both sources but I think you actually pointed out exactly the point that we were trying to make on the slide and I probably didn'''t do it very well in my written script. I mean I actually think there'''s good news associated with this. Of our $151 billion portfolio or so, $58 billion fall into this category. It was this category that was characterized by a somewhat higher loss rate. Even though for whatever reason the buyer selected to provide less documentation about these loans, we were very careful to ensure that we had borrowers that had very strong credit ratings. So the net result of that is is that 33% of the entire prime mortgage portfolio falls into this category, 33% of the total $150 is in that top left hand box and the delinquencies against that are very, very manageable.[10]

You saw the announcement we made in March where we were committed to reduce real estate assets by $45 billion during the course of the year. A key contributor to this decline is that we plan to originate loans that we can sell as opposed to loans that we hold in our portfolio. Of the total consumer lending group mortgage originations of $34.3 billion in the quarter, we decreased a proportion of those held on balance sheet to 29% versus 42% in the prior year'''s $39.6 billion of originations.[10] Writedowns at the bank in the quarter included $6bn tied to sub-prime mortgages, $3.1bn for loans to fund corporate buyouts, $1.5bn for exposure to bond insurers, $1.5bn for auction-rate securities, $1bn for below-prime 'Alt-A' mortgages, and $600m for commercial real estate. Alarm bells continue to ring also in its U.S. consumer unit, where profit fell 84 per cent compared to the first quarter last year to $279m.[14] The first quarter is a repudiation of the notion that a broadly diversified company can weather financial crises better than more focused companies. Citi is suffering across most all of its businesses, with profits down in its U.S. consumer banking and retail brokerage and losses in capital markets and international consumer lending only partly offset by gains in some international consumer banking areas and in transaction services. Shares of Citi rallied as investors lumped in Citi's results with those of other financials, despite some key differences. Fellow U.S. banks JPMorgan Chase (nyse: JPM - news - people ) and Wells Fargo (nyse: WFC - news - people ), in contrast to Citi, posted surprisingly strong profits earlier this week after they managed to blunt declines in mortgage-related businesses with gains in other areas.[7]

During the first quarter, the company reported a net loss of $5.1 billion or $1.02 per share, based on more than 5 billion shares outstanding.[40] Citigroup's quarter was a complete reversal of a year ago. It reported a loss of $5.1 billion, or $1.02 per share, compared with a profit of $5 billion, or $1.01 per share, in the quarter a year earlier.[32] The most recent quarterly shortfall is not as massive as the nearly $10.0 billion loss Citi suffered in the fourth quarter of last year. Its loss of $1.02 per share is in sharp contrast to its profit of $5.0 billion, or $1.01 per share, in the first three months of 2007.[27]

The loss was slightly deeper than many analysts had expected but European and U.S. stock markets rose in relief there were no nasty surprises. "It's a cathartic quarter," said Arthur Hogan, chief market analyst at Jefferies & Co in New York. Citigroup shares climbed 4.5% in New York to finish at $25.11 - still about half what they were trading at last year.[43] April 18 (Bloomberg) -- Citigroup Inc. posted a $5.11 billion first-quarter loss, less than analysts' most pessimistic estimates, and cut 9,000 jobs, sending its shares higher and sparking a rally in U.S. stocks and the dollar.[15] New York-based Citigroup said Friday it plans to cut 9,000 more jobs from its worldwide work force in the wake of reporting a first-quarter loss of $5.1 billion.[25] The nation's biggest bank by assets said it would cut 9,000 more jobs and took $14 billion in write-downs as it reported a first-quarter loss of $5.1 billion.[44] Yesterday's write-downs were the second large loss by the bank and its second round of layoffs. It made a $9.8 billion loss in the final three months of 2007 and announced 4,200 job cuts in January.[23]

Since the credit crisis began, Citigroup has announced 13,200 job cuts and more than $38 billion in write-downs.[44] NEW YORK - Citigroup's 9,000 job cuts and $14 billion in write-downs suggest that even if the worst of the credit market volatility is over, the industry is now in a conservative, cost-cutting mode.[45] NEW YORK - Citigroup said Friday that it will eliminate 9,000 jobs and write off $14 billion, suggesting that even if the worst of the credit market volatility is over, the industry is in a conservative, cost-cutting mode.[13]

Despite having logged $32 billion in mortgage-related writedowns since the credit crisis erupted last fall, and raising $34 billion of new capital from investors and divestitures since then, Citigroup (nyse: C - news - people ) continues to have massive exposures to the toxic assets that could continue to cause it problems. It faces the probability of significantly deteriorating consumer credit quality through this year.[7] Pandit is trying to focus on stronger businesses after years of underinvestment and questionable risk management left Citigroup bearing the full brunt of the credit market crisis. The bank has cut its dividend and raised more than $30 billion in capital.[33] The first-quarter loss was second in size in the bank's 196-year history only to the record $9.88 billion reported in the previous period. It wiped out so much capital that Citigroup may have to find outside investors or cut the dividend, Hendler said. Citigroup in January slashed its dividend by 41 percent, the first reduction since the early 1990s.[20]

Asked today if the bank might seek an additional infusion, Crittenden said, "You can never say never.'' Merrill analyst Moszkowski has said he believes Citigroup has a capital cushion of about $17 billion "above and beyond'' what was needed to offset writedowns recorded last year. When it announced year-end earnings in January, Citigroup slashed its dividend for the first time since the 1998 merger.[15] RBS said Friday that it noted speculation about "a possible rights issue" but gave no further comment. It is due to publish an update on its trading performance and capital on Wednesday, to coincide with its shareholder meeting. RBS has so far suffered a relatively modest $3.2 billion write-down from toxic assets, but it bears the scars of recent market turmoil and its balance sheet has been stretched by its leading role in the 71 billion, or $113.3 billion, takeover and breakup of the Dutch bank ABN AMRO last year. The bank now has some of the weakest capital ratios among European banks, seen as a key reason for its underperformance. It avoided a rights issue after its acquisition of Charter One in 2004. Shares in RBS, which have dropped 18 percent so far this year and largely discount a capital increase, initially rose on reports of the plan but were down 3.3 percent early Friday.[33] The bank ousted chief executive Chuck Prince late last year and promoted Pandit, a former Morgan Stanley investment banker, during a scramble for cash. In December and January, Citi raised more than $30 billion through sales of assets and stock to outside investors, some of them funds run by Asian and the Middle Eastern governments.[4] In December and January, Citi raised over $30 billion through sales of assets and stock to outside investors, some of which have been funds run by Asian and the Middle Eastern governments. It also has slashed costs and reorganized the bank's mortgage business and wealth management unit.[37]

The Paris-based think-tank, the OECD, predicts that subprime losses and write-offs would total between $350 billion and $420 billion. The credit crisis and higher bank costs are continuing to force Irish banks to increase their mortgage rates and introduce changes. Permanent TSB increased its rates on tracker mortgages, on which customers pay a margin over the European Central Bank base rate of 4 per cent.[23] Credit costs totaled $6 billion in the first quarter, including $3.8 billion in losses.[7]

Revenue came to $13.2 billion. That was about half what the bank pulled in during the first quarter of 2007, but was more than the average analyst forecast, for $12.8 billion. The bank's revenue was padded by its global consumer segment and global wealth-management business.[4] More write-downs are expected in the first quarter when Citigroup reports on Friday, and Lehman Brothers analyst Jason Goldberg estimates the sum could approach $10 billion. He rates the beaten-up stock "Overweight."[46]

KAZINFORM. Citigroup has suffered a second massive loss and is cutting 9,000 jobs as the credit crisis continues to take its toll on the biggest U.S. bank. It made a loss of $5.11bn (2.7bn) in the first quarter, although this was smaller than the $9.8bn loss reported in the final three months of 2007.[43] The Street rallied round Citigroup on Friday. The financial services giant announced that it lost $5.1 billion in the quarter and announced it will slash another 9,000 jobs, bringing its 2008 headcount reductions to 13,200. Citi also reported that tough market conditions had chopped $14 billion off the value of its investments.[27] NEW YORK (AFP) — U.S. 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.[18] Citigroup posted a $5.11 billion quarterly loss Friday and said it will cut another 9,000 jobs after suffering billions of writedowns tied to mortgages, other debt and the slumping economy.[9]

Virtually all of Citigroup's businesses reported lower first-quarter earnings from last year, and in some cases reported losses. Most notable was that of its banking group, which reported a net loss of $5.7 billion on top of revenues losses of $4.5 billion.[12] Everybody has issues," MacLeod said. Compared to other banks, he noted, the rate at which Citigroup is having to write off loans is particularly high in relation to the amount of loans on its books that are in default or close to default. "That's going to be a serious concern for the company going forward." To prepare for more consumer loan losses, the company added about $2 billion to its reserves.[37] Citigroup, like other banks, still faces a deteriorating environment for consumer lending. To prepare for more consumer-loan losses, the company added about $2 billion to its reserves.[4]

"There are times where we could face significant headwinds during the year." The company has suffered more than $32 billion in losses in its investment bank division alone since the credit crisis began over the summer.[19] Overall, the investment bank lost $2.14 billion in the period. Those losses did not stop the bank's shares from rising 4 percent Thursday, the day it announced the losses.[44] The bank also announced a $622 million restructuring charge related to the layoffs. Wall Street analysts had been expecting Mr. 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.[2] The bank announced 4,200 cuts in January, about 9,000 on Friday, and suggested that more work-force reductions are likely. Xerox Corp. said Friday that a litigation charge left it with a loss of $244 million in the first quarter, but its results excluding the one-time item matched Wall Street expectations.[45]

We knew there were going to be write-offs and hasn't yet said anything far too negative," said Andrea Williams, head of European equities at Royal London Asset Management. Earlier this week, Citigroup rival Merrill Lynch said it lost $1.96bn in the first quarter of 2008 and unveiled plans to cut about 4,000 jobs worldwide.[43] On CDOs, at year end our net super senior gross exposures were about $30 billion. At the end of first quarter, they were down to under $23 billion with the reduction driven mostly by marks. We have done extensive analysis on our assets and believe we have a very good understanding of their value and have marked them appropriately. We'''ve also been working hard on reducing our risk in these structures.[10] On the top left in leveraged lending our commitments for highly leveraged transactions totaled $38 billion at the end of the quarter with $21 billion in funded and $17 billion in unfunded commitments. This compares to total commitments of $43 billion with $22 billion funded and $21 billion unfunded at the end of the fourth quarter in 2007. During the first quarter we had a net $3.1 billion pretax write down on these commitments. Since the end of the quarter approximately $8 billion of these funded commitments to financial sponsors had been sold in a structure which allows us to lock in the price and eliminate potential downside price risk associated with these commitments. While we still retain a portion of the credit risk associated with this $8 billion sale, we believe the underlying credit quality of the borrowers is strong and that the credit risk is manageable.[10]

Merrill Lynch took $6.5 billion in write-downs during the first quarter tied to mortgage and credit related problems.[44] The write-downs for the first quarter was not as bad as some estimates, and the loss was smaller than the $10 billion hit in the fourth quarter of 2007.[32]

The most recent quarterly shortfall at the nation's biggest bank by assets was not as large as the nearly $10 billion loss it posted in the fourth quarter of last year.[13] The bank's shares surged 4.5 percent yesterday after it reported $16 billion of asset writedowns during the quarter, less than some observers predicted.[20] Citi shares were up by 7 percent to $25.41 in early afternoon trading. The advisor added that Pandit's stock-option-heavy pay package was a vote of confidence for the future of the stock and the company. Pandit's public dismissal of 'break-up' talk, and his characterization of Smith Barney as 'crucial' to Citi's success, make for a much rosier long-term outlook. 'Because we move so much of Citi's product, we're compared to ABC when Disney bought them'they needed a place to put their shows,' he says. Whether clients lacked a similar measure of confidence in the firm, or if it was the market's volatility that caused it, Smith Barney clients pulled out more assets than they put in during the first quarter.[1] "Results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions," Pandit said in a statement. Through Thursday, the company's shares had fallen 18 percent this year, compared with a 9 percent drop in the Philadelphia KBW Bank Index.BKX. The stock's 52-week high is $55.53, set last May 23.[22] "Our financial results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions," Mr. 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 in 2008 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.[2] The bank wrote down $202 million of value at Old Lane, which Citigroup bought last year to bring then-proprietor Vikram Pandit - now Citigroup's chief executive - into the company.[11]

The bank's first-quarter results reflected more than $16.9 billion in write-offs and additional loan-loss reserves, as new Chief Executive Vikram Pandit embarked on a plan to reshape the firm and clean up the mortgage mess.[47]

JPMorgan, the third-biggest U.S. bank, posted a 50 percent drop in first-quarter earnings on $5.1 billion of writedowns and provisions and Chief Executive Officer Jamie Dimon told reporters on a conference that the credit-market crisis may be as much as 80 percent over.[21]

Citigroup, the biggest U.S. bank by assets, reported almost $16 billion of trading writedowns and increased bad loan reserves as customers fell behind on home, car and credit-card payments.[48] Citigroup still has exposure to $28 billion in risky, highly leveraged loans, though that's down from $43 billion at year end. It seems investors are looking forward to better times. Even Wachovia, whose stock fell 8% on Monday after it reported a surprise first-quarter loss, saw its shares rebound Thursday and Friday, ending the week down just 2%.[42] The loss of $5.11 billion, or $1.02 a share, was deeper than Wall Street had expected, though not by much. What's more, a few analysts had predicted Citigroup would report nearly $20 billion in first-quarter write-downs, and investors seemed encouraged that such dire predictions didn't come to pass - at least this time around.[11] Citigroup reported a net loss of $5.1 billion, or $1.02 a share, for Q1 with more than $10 billion of write-downs.[29] 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.[2]

The New York-based company's net loss of $1.02 a share compared with an estimate of $1.66 by Merrill Lynch & Co.' s Guy Moszkowski, Institutional Investor's top-rated brokerage analyst, who had predicted an $18 billion writedown.[48]

Analysts polled by Thomson Financial had expected net income of 82 cents per share on sales of $8.73 billion. Honeywell raised its 2008 profit outlook to a range of $3.70 to $3.80 per share and lifted its sales to a range of $36.8 billion to $37.4 billion. Its shares rose $3.59, or 6 percent, to $60.99. During a conference call with executives, Morgan Stanley analyst Scott Davis said: "This is a pretty darn impressive quarter. We've said that for a few quarters now, so it's more than a fluke."[47] Citigroup's net loss totaled $1.02 per share, and compared with a year-earlier profit of $5.01 billion, or $1.01 per share.[16] Even with today's gain, Citigroup's shares are still down almost 7 percent since Jan. 15, when the bank posted a $9.88 billion fourth-quarter loss.[15]

The bank reported a first-quarter loss of $5.11 billion on Friday, stemming in part from the bank's books of credit-card and other consumer loans that are quickly worsening as many Americans struggle amid a tanking housing market and rising unemployment. Another Wall Street bank, JPMorgan Chase & Co. (JPM), reported Wednesday that it had set aside loan-loss provisions of $4.4 billion for its consumer loans, a nearly threefold increase from the $1.5 billion it set aside a year ago.[49] Write-downs in the latest quarter included $6 billion tied to subprime mortgages, $3.1 billion for loans to fund corporate buyouts, $1.5 billion for bond insurer exposure, $1.5 billion for auction-rate securities, $1 billion for below-prime "Alt-A" mortgages, and $600 million for commercial real estate.[16] Citigroup also saw write-downs of $3.1 billion on leveraged loans, $1.6 billion on Alt-A mortgages and commercial real estate, and $1.5 billion each on auction-rate securities and its exposure to monoline insurers.[11]

Citigroup's $14.1 in write-downs include $7 billion related to subprime and alt-A mortgages; $3.1 billion related to leveraged loans; $1.5 billion related to bond insurers; $1.5 billion on auction-rate securities; and another $1 billion related to commercial real estate, a hedge fund and funds known as structured investment vehicles.[37]

As to the $1.5 billion incremental loss taken with respect to our hedged counter parties, we have now taken $2.5 billion in cumulative credit market value adjustments related to our monoline exposure since the third quarter of 2007. The market value direct exposure to monoline increased from $5 billion at the end of the fourth quarter to $7.3 billion at the end of this quarter.[10]

The bank also incurred $3.1 billion of additional credit costs related to consumer lending.[16] Of the write-downs, $6bn was directly related to the sub-prime market, with the remainder due to other assets and exposure affected by the credit crisis. It also saw a $3.1bn increase in consumer credit costs due as people failed to keep up with payments on mortgages, unsecured personal loans, credit cards and auto loans.[43] The global consumer group suffered from $6 billion in costs arising from troubled mortgages, home-equity lines, credit cards and auto loans.[16]

Its not people with bad credit defaulting. its the that "had" perfect credit. and because of that, the mortgage companies sold them into a "subprime" loan with a "low" interest rate, Yet they didnt read the fine print or understand what "adjustable rate" mean so they could buy an overpriced quasi-mansion and live in a $300,000 home(which they could in reality barely afford a home costing $100,000). Then when the payments were jacked up because of the increase in the APR, they cant afford it, and now are in default. In addition the home prices are declining so they owe more that its worth. boo hoo. Should the country bail these banks and home owners out? NOT! No one forced them to give up their nice home for that overpriced oversized mansion and sign into a unethical loan by some snake oil salesman of a mortgage company. The banks dished out this money like candy, and now they cry about loosing money. If these financial analysts are so smart, did any of them really think this was going to be a long term profiting venture? doubt it. make a quick buck now, let the gov't bail us out.[12] Citigroup, like other banks, still faces a deteriorating environment for consumer lending: charge-off rates are climbing for mortgages, credit cards, auto loans and other types of loans. "The consumer is being pinched — it's not just homes," said Byron MacLeod, earnings quality analyst with Gradient Analytics.[37]

Ratings agencies moved quickly. Fitch Ratings downgraded Citi to AA- from AA, mostly on concerns for its consumer loan quality. Standard & Poor's put its counterparty rating on watch with negative implications, also because of Citi's exposure to a weakening consumer credit environment. Citi's response is to continue to emphasize cost-cutting and containment as a primary goal this year, rather than a break-up many outsiders have been calling for. It has already cut its dividend by 41%, but might have to slash it again or raise new outside capital. Crittenden wouldn't say Friday what the bank's plans were on that front, but he did tell an analyst who asked about his view on raising new capital "you can never say never."[7] Pandit, who took over as CEO after Charles Prince's departure from the firm late last year, is attempting to gain a handle on what many consider an unwieldy super-financial services conglomerate. At the end of last month, Citi formally announced a new corporate organizational structure in which its business lines will be combined and arranged by geographic location. The company is also splitting its consumer banking and credit card divisions into two separate units, among other things. The bank said Friday it would cut 9,000 jobs, including 7,000 in its consumer business, bringing its total identified workforce eliminations to roughly 30,000.[38] Fitch cited deteriorating earnings in the consumer business and investment bank losses. Pandit, who took over in December, inherited the subprime mortgages and bonds now being written down from his predecessor, Charles O. "Chuck'' Prince. Yesterday Pandit said he's selling assets and shedding units outside the retail banking, trading, investment-banking and transaction-processing businesses. He's cutting about 9,000 jobs over the next year, on top of 4,200 announced in January. Pandit also marked down the value of the Old Lane LP hedge fund company that he sold to the bank less than a year ago.[20]

Global wealth management, which includes Citigroup's retail brokerage business and private bank, had a 33% drop in earnings and a 16% rise in revenue. The alternative investments arm, which includes Citigroup's hedge fund business, swung to a loss amid a write-down at Old Lane, which Citi acquired and is how Pandit joined the company ahead of his ascension to CEO. The company's non-investment-banking businesses have been under close investor scrutiny, after Pandit shuffled the leadership of those divisions, trying to jumpstart revenue growth and rein in expenses.[30]

Citigroup's markets and banking business was by far the worst hit, with negative revenues of $4.48bn in the first quarter against positive sales of $8.93bn in the same period last year.[39] Revenues were up 3% on continued momentum from our strategic actions. Excluding the $349 million gain on VISA shares this quarter and the MasterCard gain from last year'''s first quarter, revenues were up on a GAAP basis 1%.[10]

Managed revenues in U.S. cards increased by 14% on 6% growth in managed receivables. Excluding the gain on VISA shares this quarter and the MasterCard gain in the prior year period, managed revenues were up 10% driven by new product introductions, the reconfiguration of our rewards programs and investment in higher growth segments. Both retail distribution and consumer lending revenues were higher on strong volume growth. Expenses in U.S. consumer grew by 6% reflecting continued investment in building branches and higher costs related to managing deteriorating credit, such as adding collectors.[10] The first quarter results were driven by two main factors, write downs and losses related to the continued disruption in the fixed income markets and in higher U.S. consumer credit costs.[10]

The total write downs including higher credit costs for the quarter were $6 billion which is shown at the bottom of the slide, including $336 million taken against the lending and structuring position of $8 billion.[10] Dllrrs 6 million from write down and credit costs on subprime related direct exposure in our fixed income markets business.[10]

Markets and banking credit cost declined 2% over last year to $249 million.[10]

Consumer lending net credit losses were higher by $762 million over last year driven primarily by higher losses in the consumer mortgage portfolio.[10] Higher net credit losses were driven primarily by our U.S. consumer businesses were NCLs increased by $1.1 billion.[10]

Citigroup was forced to write down $24 billion due to erosion of the subprime mortgage market and other credit losses, the report said.[50] Citigroup still has $29.1 billion in exposure to CDOs and related subprime holdings, even after accounting for $10.5 billion in offsetting hedges, which means more market losses in coming quarters are a near certainty.[11]

Citigroup wrote down about $18.0 billion in the fourth quarter of last year, and about $6.0 billion in the third quarter.[27] In the same quarter last year, Citi recorded a profit of $5 billion on revenues of $25.5bn.[28] Finally in last year'''s first quarter we recorded a $1.4 billion restructuring charge.[10] Since the first quarter of 2007, financial companies have taken more than $215 billion in write-downs.[44] Citigroup took 13.9 billion dollars in write-downs during the first quarter, the bank's chief financial officer, Gary Crittenden, said in a conference call.[17]

At the end of first quarter the number was $38 billion. We have sold some of these loans and Gary will tell you more about that.[10] Since replacing former CEO Charles O. "Chuck" Prince five months ago following a record fourth-quarter loss of almost $10 billion, Pandit has cut holdings of subprime-infected "collateralized mortgage obligations" by 23 percent and pared money-losing leveraged-buyout loans by 35 per cent. He's hired seven senior executives to monitor trading risks.[48] In the last four quarters we have added $8.7 billion net to our loan loss levels.[10] We strengthened the loan loss reserve by adding $1.9 billion primarily driven by the U.S. consumer reserve build of $1.4 billion.[10] In U.S. retail distribution, higher delinquencies in the retail bank home equity portfolio and the consumer finance personal loan portfolio and portfolio growth and a generally weakening credit environment led to a $362 million reserve build.[10]

"We recently reorganized the businesses along regional and product lines to bring us closer to our clients. We are taking the necessary steps to make Citi more efficient while fostering a culture of accountability and teamwork," he said. Overall profits in its U.S. consumer business dropped 84 percent to $279 million in the first quarter.[41] The news came as Citi reported a first quarter loss of $1.02 a share. That was $0.07 worse than analysts had expected.[51] Analysts polled by Thomson Financial had expected a loss of 95 cents a share on revenue of $12.77 billion.[30] Analysts on average expected a loss of 96 cents per share on revenue of $14.35 billion, according to Reuters Estimates.[22]

Citigroup essentially lost in the first three months of the year, $1.02 per share, what it made in the same period in 2007 — $5 billion, or $1.01 per share.[37] The loss, which amounts to $1.02 a share, is a stark change from the $5 billion in profit the firm earned at the same time last year.[12]

The charges bring the total charges for the world's biggest banks and brokerages to more than $260 billion since the beginning of last year. Wall Street CEOs including JPMorgan Chase & Co.' s Jamie Dimon, Goldman Sachs Group Inc.' s Lloyd Blankfein, Lehman Brothers Holdings Inc.' s Richard Fuld and Morgan Stanley's John Mack have said they're optimistic the worst of the credit crisis may have passed.[15] The division, which includes all of the bank's investment banking and fixed income work, made a net loss of $5.67bn, compared to a $2.66bn profit in the same period last year.[39] To replenish capital -- the cushion that regulators require banks to keep to safeguard deposits -- Pandit has sold equity to investment funds controlled by the governments of Abu Dhabi, Kuwait and Singapore. In all, he has raised at least $30 billion. The prospect of further infusions has weighed on the stock because they would dilute earnings for existing shareholders.[15] Mr Crittenden admitted: "The risk is substantially lower in our institutional business than it was at the start of the credit crisis." However,he refused to rule out raising more money to boost the bank's capital position in the future, saying "never say never", even though it has raised $30bn in the past 12 months - including money from a number of sovereign wealth funds such as the Abu Dhabi Investment Authority and former chairman Sandy Weill. That money was raised to help bolster the bank's balance sheet following a series of financial write-downs.[39]

Merrill's results included about $4.5bn of sub-prime related write-downs. Citigroup's revenues plunged 48% to $13.2bn as the firm wrote-down the value of assets linked to sub-prime mortgages - those given to people with poor or patchy credit histories.[43] The net loss was driven by the lower revenues and a $202 million write-down of the multi-strategy hedge fund intangible asset related to Old Lane.[12] Alternative investments recorded a net loss of $509 million on sharply lower proprietary revenues, a $202 million write down of hedge fund management contract intangible assets related to Old Lane and a $212 mark to market loss on the SIV assets.[10]

In addition there was an incremental loss of $1 billion shown towards the bottom of the slide, principally related to credit rating downgrades of hedged counter-parties with subprime exposure, primarily monoline insurers. As to the $29.3 billion of net super senior direct exposures and the associated $5.7 billion write downs, these exposures continue to be subject to valuation changes based on discounted cash flow methodology and not-unobservable transactions.[10]

Moving now to the top of the table, we recorded a $5.7 billion write down against the net super senior exposure of $29.3 billion, shown in the middle of the first column. We started this quarter with a gross exposure of $37.3 billion shown at the bottom of the first column.[10] At the end of the first quarter, before accounting for the write down, we held ARS securities with a par value of $8 billion in our inventory, down from a peak of $11 billion in mid-February. After accounting for the write downs in this quarter, the inventory stood at $6.5 billion as is shown on the chart.[10]

Last month, Oppenheimer & Co. said Citigroup could write down another $13.1 billion in assets in the latest quarter.[30] Yeah I mean it is exactly as I described it. We feel very good about our capital position as you know we moved very early to raise capital and as I mentioned with all of the actions taken we'''ve raised about $35 billion, that is reflected in the way our ratios have improved during the course of the quarter and we'''re trying to be very prudent about this and we'''re managing our assets down.[10] The value of the SIV assets and liabilities at the end of the quarter was $47 billion including $170 million of junior notes.[10]

Pandit "is doing the right things in our eyes,'' said William B. Smith, president of Smith Asset Management LLC in New York, which oversees about $80 million, including about 66,000 Citigroup shares.[15] Despite the bad news, Citigroup shares rose $1.76 to $25.79 on investors' relief that the news was not as bad as some had feared. Citigroup's share price rise and a positive set of results from industrial giant Caterpillar helped Wall Street to have one of its best trading days in two months, with the Dow Jones Industrial Average trading up 251.59 at 12,872.08 in late trading. Citigroup has now considerably reduced its exposure to troublesome credit and leverage loan products which have caused the bulk of the pain to date.[39] The shares climbed $1.08, or 4.5 percent, to $25.11 yesterday in New York Stock Exchange composite trading. Even with yesterday's gain, Citigroup is down 15 percent this year.[20]

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 Friday. It is hardly smooth sailing for the bank from this point on.[45] Shares rose 8.4 percent for the week, to $47.35. Shares of other financial services companies jumped this week. National bank Wells Fargo & Co. said its first-quarter earnings fell 11 percent, but they still beat analysts' estimates by 3 cents per share, according to Thomson Financial.[44]

Citi shares traded up 5.7%, or $1.37, to $25.40. This year, 36,000 job cuts have been announced in the financial services industry, according to job placement consultant Challenger, Gray & Christmas. That figure does not include Citi's layoff announcement.[9] Gary Crittenden, chief financial officer, told Wall Street analysts that the slowdown and housing crisis could result in significantly higher credit losses in the remainder of the year. The new round of job cuts among Citi'''s 370,000-workforce brought its entire number of redundancies since the beginning of the credit crunch to more than 13,000.[28] Vikram Pandit, Citigroup'''s chief executive, has vowed to cut the under pressure financial group'''s cost base by up to 20 per cent, deepening worries that Wall Street and the City of London are about to be hit by tens of thousands of additional job losses.[8] LONDON (Thomson Financial) - Citigroup's chief executive Vikram Pandit vowed to slash the company's cost base by up to 20 percent, deepening fears that the City and Wall Street will be hit by tens of thousands of additional job losses, the Financial Times reported.[52]

April 18 (Bloomberg) -- Citigroup Inc. Chief Executive Officer Vikram Pandit said the biggest U.S. bank plans to slash costs by as much as 20 percent, the Financial Times reported. It is "clearly feasible'' for Citigroup to take "10, 15, 20 percent'' off its cost base, especially in information technology and operations, the FT cited Pandit as saying.[21]

'''Our financial results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions," Vikram Pandit, Citigroup's chief executive, said in a statement Friday. He emphasized that the firm has been cutting costs and streamlining its operations, and promised that he will continue to sell assets as necessary.[12] Vikram Pandit, Citigroup's chief executive officer, said Friday he was "not happy" with the results. He said he's selling assets to free up capital and shedding units outside the company's "core" retail banking, trading, investment-banking and transaction-processing businesses.[48] "Expectations are low enough that you can have some positive stock performance even off a bad number.'' Vikram Pandit, Citigroup's chief executive officer, said today he was "not happy'' with the results. He said he's selling assets to free up capital and shedding units outside the company's "core'' retail banking, trading, investment-banking and transaction-processing businesses.[15]

Apr 19 Vikram Pandit, in his first quarterly result as Citigroup Inc's chief executive officer, marked down the value of the Old Lane LP hedge fund company that he sold to the bank less than a year ago.[35]

If investors were encouraged that earnings came in generally as predicted, ratings agencies grew more concerned, not less. Fitch Ratings on Friday cut Citigroup's credit rating one notch to AA- and said the bank's outlook is negative, since rising consumer credit costs will weigh on Citigroup's results beyond this year.[11] What we have shown, we have shown you historical trend data for losses in our mortgage portfolio and in our card portfolio. Using this information as well as internal assumptions for each of our consumer portfolio, there are scenarios which could result in significantly higher credit costs for the remainder of the year.[10]

We hope to do a good job of kind of talking about the steady state company with the core businesses when we get together on Citi day. As regards to reserving, you know I think I carefully said that we feel very comfortable that we'''re properly reserved for the losses that are imbedded in our portfolio today but we are watching both the real estate and the credit side of this thing very carefully and you know you can see that historically there have been increases in credit card losses that have happened during the course of cycles like these. This cycle could be particularly difficult if the real estate issue is compounded by significant increases in unemployment. You know we haven'''t really had cycles where both of those factors were happening in magnitude at the same time and that could result in losses that extend beyond where we'''ve seen historical levels go and we are in unprecedented territory I think from a real estate standpoint. You know we'''ve tried to slice and dice our portfolio in as many ways as we could by broker channel by you know the amount of documentation, to give you the maximum amount of transparency around where we think the exposures are in this portfolio but we are in uncharted territory and so there were a couple of times as I went through some of that detail where I emphasized that we could in fact face significant headwinds as we go through the remainder of the year, resulting from these increases and that is certainly a possibility.[10]

Citi's results factored in $6 billion in writedowns on subprime-related securities, $3.1 billion on leveraged finance commitments, a downward credit value adjustment of $1.5 billion, writedowns of $1.5 billion on auction rate securities.[38] We sold approximately $4 billion of funded commitments in the normal course of our business activity after the end of the quarter. In alt A mortgages we had $22 billion in market value of such securities at the end of 2007 and are now down to $18 billion.[10] At the end of the quarter our net super senior ABS CDO direct exposure was $23 billion and our gross direct subprime exposure related to the structuring and lending business was $6.4 billion.[10] Of the $18 billion, we have a $4.7 billion mark to market portfolio where the marks for the quarter were approximately $900 million net of hedges.[10] Smith Barney posted strong revenue growth of 18% from a year earlier but saw net profits slide 56% to $142 million from $324 million in the first quarter of 2007.[34] Excluding one-time gains related to public stock offerings of Visa and MasterCard, Citigroup's U.S. credit card revenue was down 8 percent in the first quarter, and net income declined 34 percent.[41]

Slide 15 shows the results of our international consumer business. This quarter the results were affected by a number of the items that are disclosed in the schedule on slide 22. Excluding these items, revenues increased by 22% although net income would have declined significantly due to higher credit costs.[10] Citigroup said the first-quarter net loss was mainly driven by fixed-income results and higher consumer credit costs.[17]

Turmoil from the mortgage and credit markets cost the bank almost 12 billion dollars and consumer credit problems required a 3.1-billion-dollar increase in credit costs.[17] Credit costs increased by $2.2 billion driven by the factors I discussed earlier.[10]

The loss was larger than expected and reflected more than $16 billion of writedowns and credit-related costs at the nation'''s largest bank. It compares with year-ago profits of $5.01 billion.[9] Revenues in the private bank were up double digits again reflecting strength in structured lending and in capital markets products. Expenses were up 32%, 20% excluding a $250 million reserve driven by acquisitions, increased customer activity and a repositioning charge. is facilitating the liquidation of investments in a Citi managed funds for its clients that have been negatively affected by recent market stress in certain fixed income assets. has established a $250 million reserve to cover the estimated cost of this offer.[10] Citi Private Bank saw a 10% increase in revenue to $631 million. This was driven by a 15% increase in U.S. revenues and an 8% increase in global revenues. Its expenses also shot up by 6% due to the reserve fund and a repositioning charge.[34]

Citi took repositioning charges of $622 million in the quarter. CFO Gary Crittenden, in response to a question posed by Oppenheimer analyst Meredith Whitney, said that operating leverage -- the process in which revenue grows faster than expenses -- will be a difficult measurement as the company moves forward with its restructuring.[38]

Strong results in Asia reflected the strength in the franchise in the region and the fact that the market dislocation in the U.S., while increasing the volatility in many markets, did not extend uniformly to all global markets. Expenses increased 3% versus last year, excluding $321 million from this quarter'''s expense relating to repositioning, expenses were down by 3%.[10] Troubled U.S. banking conglomerate Citigroup vowed to keep on cutting costs and jobs after $17bn of writedowns and charges pushed it into the red in the first three months of the year.[39] Citigroup essentially lost in the first three months of the year what it earned in the same period in 2007 -- $5 billion.[13]

There are no easy answers here, no silver bullets." In recent months, Citigroup has raised about $30 billion from investors, mainly from sovereign wealth funds in Singapore, Kuwait and Abu Dhabi, to replenish its capital reserves. Although Mr Crittenden said that he had no plans to raise further cash he added: "You can never say never." He also said that on Thursday Citigroup had closed the sale of a $12 billion portfolio of loans financing leveraged buyouts, but he would not reveal the terms of the deal.[3] Citigroup set aside about $1.8 billion to increase reserves for bad consumer loans, saying the housing market decline and rising unemployment were putting more borrowers behind on payments.[15]

Meredith Whitney says the quarter for Citigroup may be $3.00 to the downside and it comes in at $2.20 in the hole and everyone's dancing in the streets? Lehman has $84B in Alt-A and NO ONE is paying their mortgages in CA, NV, FL, and CO. Citigroup is out of the student loan business, and out of the mortgage business.[29] Citigroup's Tier 1 capital ratio -- a financial measure regulators use to monitor a bank's ability to withstand loan losses -- rose to 7.7 percent at the end of the quarter from 7.1 percent at the end of 2007.[15] Citigroup's stock has fallen 15 percent since the beginning of the year. Wall Street analysts had expected Pandit to swallow big losses in the bank's consumer businesses and in investment banking so he could get off to a fresh start.[47]

Under Prince, Citigroup's balance sheet swelled by $689 billion, an amount larger than the entire balance sheet of Wells Fargo & Co., the fifth-biggest U.S. bank. [15] Citigroup has obtained more than $30 billion in capital since the crisis began last summer and Crittenden did not rule out having to raise additional more. This article is copyrighted by International Business Times.[19] NEW YORK (Associated Press) - Since mid-2007, Citigroup has written down more than $24 billion in mortgage-backed securities and related items.[46] The write-downs included big subprime-related hits from the same complex securities - called collateralized debt obligations - that have now cost Citigroup approximately $25 billion.[11]

The extra yield, or spread, investors demand to own Citigroup's $4 billion of 6.125 percent notes due in 2017 instead of similar-maturity Treasuries narrowed 7 basis points to 224 basis points, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.[15] Citigroup is expected to report a first-quarter loss of $4.75 billion today, based on a Bloomberg survey of six analysts.[21] The loss totaled $5.11 billion, or $1.02 per share, and compared with a year-earlier profit of $5.01 billion, or $1.01 per share.[22] Citigroup's loss equates to $1.02 a share, compared with a profit of $1.01 a share a year earlier.[3] Despite the loss, Citigroup shares rose $1.43, or 6 percent, to $25.46 in premarket trading. JPMorgan and Merrill Lynch also released earnings this week.[33]

Revenue rose 13 percent, to $4.33 billion from $3.84 billion. Its shares rose 7 cents, to $14.57.[47] Revenue rose 13 percent to $4.34 billion from $3.84 billion a year ago and above Wall Street's estimate for $4.24 billion.[45] Revenue fell 48 percent to $13.2 billion, compared with the average estimate of $11.1 billion from analysts surveyed by Bloomberg.[15]

Revenues were a negative $4.5 billion and we reported a loss, a net loss of $5.7 billion.[10] International revenues were up in every region except EMEA where the decline reflected a $1.4 billion subprime related write down and $460 million in write downs on highly leveraged finance commitments in the region.[10] As to the $8 billion of gross lending and structuring exposure and the write down of $336 million, of the $336 million total, $78 million related to the CDO warehouse inventory and unsold tranches of ABS CDOs.[10]

The banking giant is writing off another $14 billion related to bad mortgages and leveraged loans.[51] Slide 11 shows a different cut of first mortgage portfolio, which is the buyer selected low documentation portfolio by LTV and by FICO band. We have $58.1 billion of such mortgages which are a subset of our first mortgage portfolio of $151 billion.[10] Merrill Lynch revealed a further $6.5 billion hit on Thursday and said that it would cut another 4,000 jobs worldwide, of which about 400 are expected to come in the City. On the same day it emerged that UBS was preparing to cut about 900 banking staff in London next month, about 10 per cent of its workforce in the City, as part of a much larger global cutback.[3] Citigroup Inc. is unlikely to cut jobs in the Middle East region as it restructures its operations amid write downs worth billions of dollars, a bank executive told Down Jones on Sunday.[5] In a conference call discussing first quarter financial results, Citigroup officials announced Friday that it will be cutting 9,000 jobs -- which includes job cuts due to divestitures.[40] 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.[18]

Janis Tarter, spokeswoman for Citigroup in San Francisco, says company Chief Financial Officer Gary Crittenden told analysts that the 9,000 jobs is a global number and that the financial services company is not providing details about impact on specific locations. Some of the cuts, she says, have already been announced and some will happen over the next 12 months.[40] "We're focused on expense management," Crittenden said. One day ago, the Financial Times published an interview with Citi's Chief Executive Vikram Pandit in which he said the bank could cut its expense base by as much as 20%, which suggests that more rounds of job cuts could be in the offing throughout 2008.[24] The move led to a $622m one-off first-quarter charge. Vikram Pandit, chief executive, is anticipated to make additional cuts in the coming months as part of its plans to reduce Citi'''s $60bn cost base by up to 20 per cent.[28]

LEVINE: I think if you look out 12 to 24 months, Citi still has a great global franchise and I think, you actually saw it today, the net interest margin has begun to expand with the interest rate cuts that we've seen so I think if you have a long enough outlook, you can certainly begin to buy today. GURVEY: Citigroup holds its annual investors' day on May 9. It is the first since CEO Vikram Pandit took command. He is expected to outline his long run vision for the company at that meeting.[51] I don't think anyone is really looking at the next quarter or two. I think the big question is what can Citigroup earn in 2009? They're selling some assets. They're shrinking the balance sheet, I think the key thing is what is the earnings power of the company. GURVEY: Citi also kept its dividend intact when many were expecting a cut.[51]

JPMorgan shares jumped nearly 8% for the week. Even though it said Wednesday that earnings fell 49% vs. a year earlier, they were better than analysts had figured. Wells Fargo gained nearly 9% last week after its smaller-than-expected profit decline. After spilling red ink since the latter part of last year, Citigroup and Merrill are expected to turn profitable again, according to analysts polled by Thomson Reuters. In the second quarter, they expect Citi to earn 57 cents a share and Merrill 76 cents. Other financial measures also will improve, some say.[42]

Citi's shares rose 4.5%. It was the same thing the day before with Merrill Lynch, which said it lost almost $2 billion and wrote down another $6.6 billion in risky assets.[42] We are making substantial progress on asset management; just yesterday we announced the divestiture of Citi Capital which had $13.4 billion in assets.[10]

Finally as the grey bar shows, we have approximately $6.4 billion in equity investments from for example limited partner fund investments which are accounted for by the equity method. We have announced just this past week that we'''ve hired Thomas Flexner who will be responsible for directing commercial real estate activities across investment banking, commercial real estate finance and Citi alternative investments.[10]

CDOs have plagued many other banks and brokers, and financial institutions worldwide have now lost more than $225 billion from subprime-related investments.[11] The continuing global financial crisis has forced banks worldwide to write off more than $200 billion.[23]

In the last two quarters we added approximately $35 billion to our capital base. Both of these actions combined have strengthened the balance sheet of the company.[10] We'''re very focused if opportunities come up that we think are appropriate for the company or if the risk environment should be fundamentally different we will do whatever is necessary to ensure we have a strong capital base. Great, thanks and just one last one, on slide 11 given that full detail on the $58 billion of the low doc borrowers, I guess if you could provide any color on, it feels like a little bit of a mismatch, most of these people have reasonably high FICO scores or at least above the line and then low LTV. But it feels like a mismatch of what I think of as a high quality borrower but doesn'''t want to fill out documentation.[10]

On leverage loans, at year end we had $43 billion of highly leveraged finance commitments.[10] Total client assets increased 14% to $1.7 trillion from a year earlier, $482 billion of which is in fee-based accounts.[34] The prior period included a $1.4 billion charge related to a structural expense review related to the structural expense review, offset by a gain on certain of our corporate owned assets.[10] The bank, the nation's biggest by assets, also announced a $622 million restructuring charge.[47] Excluding acquisitions, expenses were actually down 4% in the quarter. The major components of the change are a $622 million repositioning charge related to a number of activities such as headcount reductions and branch closing, including an expected reduction in force of over 9,000. This is in addition to last quarter'''s expected headcount reduction that we announced of 4,200. We'''ll continue this process throughout the year as we make progress in our productivity and continuing reengineering programs.[10]

Pandit is one of Old Lane's investors. He received $165.2 million last year from Citigroup for his stake in Old Lane, then reinvested $100.3 million, after tax, into the fund, according to a March regulatory filing.[35] Low interest rates make margins better. "If the write-offs are going to come down, the earnings will be very strong by the end of this year," he said. Citigroup CEO Pandit defended how his firm values assets. "We have done extensive analysis on our assets and believe we have a very good understanding of their value and have marked them appropriately," he said on post-earnings conference call. Concerning loan-loss reserves on real estate, he later told analysts, "We are kind of in uncharted territory there," so the firm has "chosen to take very significant reserves there." Since he took over at Citigroup late last year, Pandit has been restructuring, selling noncore assets and trimming the work force.[42] Last year, investments and assets based on sub-prime loans quickly soured as higher interest rates pushed up mortgage payments and triggered a wave of defaults, Kazinform cites BBC News.[43]

With significant exposure to problematic mortgages and leveraged loans, Citigroup remains at risk for further writedowns. Fitch Ratings downgraded the bank's credit rating, while Moody's Investors Services and Standard & Poor's Ratings Services took actions that indicated Citigroup might be downgraded in future if its assets deteriorate firther.[4]

The quarter could be a turning point for write-downs, which have plagued banks since the middle of 2007 when the mortgage and credit markets began to deteriorate, Citi Investment Research analyst Prashant Bhatia said in a research note on Merrill Lynch & Co.' s quarterly results.[44] The stock rallied "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.[17] NEW YORK, April 18 (UPI) -- New York City's Citigroup was hit with billions in first-quarter write-downs and could lay off 24,000 workers this year, sources close to the company said. The company plans to unveil its plans Tuesday, CNBC reported.[50] Most important, and which the news doesn't focus on, is Citigroup made 5 billion each of the previous years, much of which was on sub-prime mortgages. The net is still hugely profitable for them.[12] Citigroup announced in January a fourth-quarter net loss of 9.83 billion dollars, dragged down by soured mortgage investments.[18] Updated from 9:59 a.m. EDT Citigroup C posted a big first-quarter loss on billions of dollars more in writedowns and announced thousands of planned layoffs, but shares rose as the damage did not appear as bad as some feared.[38] Our diluted share count for the quarter was 5.6 billion, but in accordance with GAAP is not used in the EPS calculation in a net loss situation.[10]

In the three months to March, Citi said it lost $5.1bn, or $1.02 a share, against analysts expectations of a $0.96 loss per share.[28] The loss was $1.02 per share, compared with a a profit of $1.01 a year earlier.[4] The office equipment-maker said it lost 27 cents per share, compared with a profit of $233 million, or 24 cents a share, a year ago.[47]

Book value per share, which measures assets minus liabilities, fell to $20.73 from $22.74 at year end.[16]

About 300 of the latest redundancies will be in London. The shares closed up $1.08, or 4.5 per cent, at $25.11, despite the larger-than-expected writedown, as investors welcomed the news that the bank was tackling its huge cost base.[3] Citigroup (nyse: C - news - people ) shares jumped 4.5%, or $1.08, to $25.11.[27] Citigroup shares closed up $1.08, or 4.5 percent, to $25.11 on Friday.[25] Citigroup's shares closed up $1.08, to $25.11. Bond prices fell as investors found some reassurance in this week's earnings reports.[2] In recent pre-market trading, Citigroup shares were at $25.38, up 5.6% from Thursday's close.[30]

All told, Citigroup has taken nearly $39 billion in write-offs. With unemployment rising and the economy possibly entering a recession, those figures could continue to grow.[47] Citigroup's $1.02-a-share loss was 7 cents worse than the Wall Street consensus, due in large part to higher than expected asset write-downs.[42] The results included about $12bn of write-downs for sub-prime mortgages and other risky assets.[43]

The $14.1 billion in write-downs were smaller than the $18.1 billion it marked down after the fourth quarter.[37] The remaining $13.6 billion is held as available for sale securities in which we recorded $120 million impairment in the quarter.[10] The $14 billion in writedowns compared with $18 billion marked down after the fourth quarter.[4] Off the $28 billion, $17 billion were unfunded commitments at the end of the quarter.[10] We'''ve taken very aggressive action as I'''ve mentioned, you know we'''ve added $8.7 billion to strengthen our reserves over the course of the last four quarters and feel good about our aggregate reserve position.[10]

Royal Bank of Scotland is set to announce a rights issue next week, said a person with direct knowledge of the situation, in a move that analysts say could raise as much as $20 billion and lead to similar action by other banks.[33] The New York Times needs to investigate the relationship between Barack Obama and Penny Pritzker. Mrs. Pritzker, his finance campaing chair, was just fined $400 million dollars to avoid being indicted in a massive bank failure in Chicago where the governement lost $700 million. Mr. Obama was involved in this deal along with his wife.[12] Citibank's losses are directly related to the Community Reinvestment Act backed by Senator Schumer of New York, which forced the bank's to make loans to individuals with bad credit the same people who are now defaulting.[12] Slide number 9 shows consumer net credit losses and loan loss reserve as a percentage of loans for the U.S. consumer business in the top box and the same data for the international consumer business in the bottom box.[10] Looking at the top box, loan loss reserves and net credit losses as a percentage of the consumer loan portfolio have risen sharply reflecting all of the factors that I'''ve discussed.[10]

The financial giant sounded a bearish note on the U.S. consumer business, saying that additional losses were expected as consumers fell behind on credit card and loan repayments.[28] From another angle - the U.S. consumer's - the worst is yet to come. The earnings reports out from banks this week suggest a growing crowd of Americans are quickly falling behind on their credit-card, home-equity and automobile loans - a trend that could litter the market with losses for many quarters to come.[49]

Approximately half of $659 million of the U.S. consumer build was in the consumer lending group reflecting continued weakness in the mortgage portfolio and a higher expectation of losses in the auto portfolio.[10] In U.S. cards, net credit losses were up by $102 million reflecting higher write offs and lower recoveries.[10] Now slide number 12 shows a 20 year historical view of net credit losses in the U.S. cards portfolio. While the mix of our cards in the portfolio has changed over time, there are some interesting observations to make about this history.[10]

"Underwriting standards have to be high. That's the way to dampen potential losses you might face," said chief financial officer Gary Crittenden in an interview. He said that historically, deterioration in consumer credit has taken eight to 10 quarters, or at least two years, for rates of delinquency and default to recover.[45] "We believe we have substantially reduced our risk, given the size of the write-downs we have taken the last few quarters," said Chief Financial Officer Gary Crittenden. He warned that consumer credit costs may continue to worsen for the remainder of the year.[47] As I explained earlier, credit costs in the consumer business may continue to rise throughout the year. You have seen us build reserves and as this trend continues we believe the consumer credit costs could have a meaningful impact on our results for the remainder of the year.[10] Higher credit costs were driven in large part by our cards and consumer financing business in Mexico and India as I have discussed already.[10]

In terms of the macro economic outlook, there's actually somewhat less visibility in terms of just old fashioned credit risk. GURVEY: Those are the risks all financial institutions face during a slowdown. It is difficult to forecast the impact as credit starved consumers cut back on spending in light of falling home values and increased costs for necessities like food and energy.[51] In an interview with the Financial Times, Pandit indicated that deep job cuts are coming. "It is clearly feasible for us to take 10, 15, 20 percent off our cost base, especially in information technology and operations," Pandit told the paper. That would mean tens of thousands of jobs lost worldwide.[32] Pandit's cost-reduction targets suggest that Citigroup may cut more jobs than expected, the Financial Times said.[21]

The bank is also moving control expenses. Citigroup announced that it would cut 9,000 jobs, with the majority of those coming from its consumer banking division and 1,700 in its investment banking unit.[19] American investment bank Citigroup is to cut hundreds of British jobs as part of a cull of 9,000 staff worldwide.[6]

Bear Stearns has eliminated about 2,000 jobs since last year. Wachovia said Monday that it plans to cut 500 jobs in its corporate and investment bank.[13] "Cost cutting is emerging as a key issue for U.S. banks in 2008," said Octavio Marenzi, head of consulting firm Celent, in an e-mail. He says up to 200,000 banking jobs in the U.S. likely will be cut this year.[42] The cost cuts suggest that Citigroup may shed more jobs than the 25,000 analysts estimates, the paper said.[53]

Citigroup has announced 13,200 job cuts since the credit crisis began slamming the banking industry last summer.[37] The layoffs represent less than 2.5 percent of the company's 369,000 employees worldwide. They are in addition to the 4,200 announced in January, bringing the total number of job cuts to more than 30,000 since last year.[2]

We had revaluation gains against our trading account assets. Those revaluation gains had an impact on the numbers in that particular column. So they are very idiosyncratic factors that are driving each of those individual line items. If you were to take kind of the real day to day management of assets has been very, very tight and I think particularly our markets and banking team have done an outstanding job of managing the exposures that they have an eliminating less productive areas where you know we have capital invested. That'''s a long term process, it doesn'''t happen overnight, we'''re still going to be working on this diligently I'''m sure a year or two from now. The team itself has made good progress and the areas where you see increases here generally are caused by these idiosyncratic factors that happened to impact us in the quarter. In aggregate, you know taken over the last two quarters, assets are down very nicely, you can see how the matched book for example is down both on the assets as well as the liabilities side here. So you know we feel pretty good about how these assets are managed and we haven'''t seen anything in terms of draw down of credit lines that would be out of pattern in any way in particular.[10] As for the private bank, it hasn't had net new assets since the third quarter of last year.[1] Pandit was hired to improve the alternatives unit at Citibank about a year ago. It looks like he's lined his pockets and made a further mess of the business. If he can't properly run the business he was hired for what are the chances he will be successful at Citi? I guess when the inept board of directors has Richard Parsons one of the largest shareholders destroyers of wealth in media and Bob "Not-my-Fault" Rubin handpick an unexperienced CEO you get a Pandit. He stirring the pot and maybe successful, but it won't be due to him. He should thank the Fed for increasing the net interest margin and the SWF for providing capital. Other than that there are at least a half a dozen more capable banking executives of managing a bank. Pandit was just a trader that rose to the top because of his understanding of capital markets and the strength of those new markets. He has never done aturnaround before and is just relying on consultants and internal staff people.[12] Vikram Pandit, the chief executive of Citi, said that there will be more changes to come. "As we move into the second quarter and beyond, we will continue to divest nonstrategic 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.[32] "Were not happy with our financial results this quarter, although they are not completely unexpected given the assets we hold," said newly installed Chief Executive Vikram Pandit.[19] Good morning ladies and gentlemen and welcome to Citi'''s first quarter 2008 earnings review featuring as Citi Chief Executive Officer, Vikram Pandit and Chief Financial Officer Gary Crittenden.[10]

"Our financial results reflect the continuation of the unprecedented market and credit environment," said Citigroup chief executive Vikram Pandit.[43] "Results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions," Vikram Pandit, Citigroups chief executive, said in a statement.[33]

Description / Introduction: Citigroup's new chief executive officer, Vikram Pandit, has announced his intention to slash costs by up to 20 percent.[36]

Mr Crittenden was speaking after chief executive Vikram Pandit reported losses after tax of $5.1bn (£2.5bn) in the three months to March.[39]

The person spoke on the condition of anonymity because of the sensitivity of the negotiations. The capital increase, long talked about among investors but frequently dismissed by RBS management, is a radical reversal for RBS and would be the first such action by a British lender since the start of the credit crunch. It could also mark the end of an era for the banks well-respected chief executive, Fred Goodwin, who analysts and shareholders say will face a struggle to push through a big capital increase and remain in the job. [33] "As we go through the year, write-downs on securities and loan provisions on loans will be dramatically less," said analyst Dick Bove of Punk Ziegel. He says banks have been taking excessive write-offs and loan provisions in the first place. Write-offs taken on securities, he says, are based on flawed indexes. He said a commonly used index tracking home equity loans from the second half of 2007 has fallen to a level implying an 80% default rate for such securities held by U.S. banks. "In the worst depression in this country we have never had 80% defaults on housing," he said.[42] As asset markets go up and down and since that'''s primarily a U.S. based number, as asset markets go up and down in the U.S., the number has gone up and down with the level of the markets. As you know equity markets weakened as we came through the month of March, they'''ve obviously rebounded over the last three quarters, three weeks or so, but equity markets weakened for the most part during the first quarter of the year and the overall revenue level associated with that was weakened as well. The second element of their revenues are transaction revenues.[10] I mentioned in the comments that I made that if you took the marks out of the markets and banking business that had impacted us significantly in the quarter then our revenues would have been roughly flat. Obviously on the page, I think it'''s page 2 of the deck, I talked about a number of charges which if you rolled those back into pretax income you could do some kind of an estimate of what the run rate would be for the company and it would give you a little bit of a sense of what our core earnings might have been during the course of the first quarter.[10]

Regional bank BB&T; Corp. managed a modest 2 percent increase in profit during the first quarter, helping it beat estimates. Its shares gained 2.9 percent on Thursday after its report and finished the week up 8.1 percent. Despite the rally, there are some that doubt this is the turning point for the beleaguered financial sector.[44] Smith Barney's pre-tax profit margin fell to 10 percent in the first quarter, down from 23 percent at the same time last year.[1] So actually I don'''t have a split that would show the total number that have left the company. I mean we have in terms of the strategic initiative that we did in the first quarter of last year, we expected 14,000 people to come out by this point in time and those 14,000 people have come out.[10]

Citi's leverage grew in the fourth quarter of last year to 19:1, up from 18:1 the quarter before. It looks like bean counters in the bowels of the company's accounting department are still trying to lever the struggling bank out of its problems.[16]

Citigroup investors took comfort that the bank is taking steps to get beyond credit problems, drive down expenses and restore luster to a stock down by about half over the last year.[9] Investors seemed to be betting that the pain is mostly over for Citi. The revival came despite a warning from Moody's, which cut its outlook on Citi's bond ratings to negative, saying the first-quarter charges were higher than had been expected. "Because of Citigroup's complexity, its significant exposure to the global capital markets, and current illiquidity and volatility of some of those markets, additional marks in its investment bank cannot be ruled out," said Moody's Senior Vice President Sean Jones.[27] What's more, investors' confidence that Citigroup will soon return to profitability could be premature, since losses from souring consumer loans are beginning to climb quickly, even as losses from bad investments in subprime mortgages seem to be on the wane.[11] With unemployment rising and the economy possibly entering a recession, Mr. Crittenden warned that losses from mortgages, credit cards and other consumer loans are expected to balloon in the coming months.[2]

A person with regular to bad credit ends up paying $2,300 for a 160K mortgage loan. Most folks with regular to bad credit are in the lower income bracket and can'''t afford to pay these abusive interest rates.[12] In the current credit crunch, says Weiss, consumers have traveled the opposite path, with delinquency rates first spiking within mortgage pools, and only later moving onto credit-card, auto and home-equity loans. "It's actually an odd pattern," says Weiss, "because it's backwards." Weiss says that recent changes to bankruptcy laws leave less incentive for consumers to keep current on their home loans, meaning many are giving up on their mortgages more quickly than in the past. Says Weiss, "some people are paying their credit cards and not paying their mortgages." "It's a lot easier to keep a credit card current," since the payments are generally much smaller, says Weiss.[49] Charge-off rates keep climbing for mortgages, credit cards, auto loans and other types of loans. "The consumer is being pinched," MacLeod said, "It's not just homes." This copyrighted material may not be published, broadcast or redistributed in any manner.[13]

Weiss agrees, and says unprecedented losses among certain types of consumer loans will soon be in the offing. "We think home-equity loss rates are going to be off the scale," he said.[49] The weighted average delinquency for the entire portfolio is 3.8% versus 3.2% for the entire first mortgage portfolio. We have stopped originating stated income and stated asset loans and we'''re actively working with borrowers to mitigate losses in this portfolio.[10] With the addition to reserves in our U.S. mortgage business, we are at a 14.7 month coincident reserve coverage ratio for the real estate lending portfolio. 13.3 months and 15.6 months of coincident reserve coverage in our first and second mortgage portfolios respectively. As we said last quarter we expect higher losses in the portfolio and this quarter, these ratios have declined accordingly but remain at very strong levels.[10]

As Citibank became the latest lender to announce further large subprime-linked losses, the governor of the Central Bank, John Hurley, once again asserted that Irish financial institutions remained robust and capable of absorbing shocks. His reassurances came as more Irish banks yesterday put up their interest rates on mortgages and cut back on lending.[23] The cuts would include job losses among the bank's 370,000 employees, Pandit said.[21] The bank plans to eliminate 9,000 jobs in the next 12 months, Chief Financial Officer Gary Crittenden said today in an interview. That includes 2,000 of the 6,200 cuts the bank has already announced.[15] Gary Crittenden, the chief financial officer, yesterday said the financial conglomerate plans to axe 9,000 jobs on top of the 4,200 it has already announced. He said the bank's focus on reducing its cost base is unending, adding: "It won't end as long as I have this responsibility."[39]

Merrill Lynch, the world's largest brokerage, said Thursday that it would cut 3,000 jobs, in addition to the 1,000 layoffs previously announced. JPMorgan Chase said Wednesday that there would be staff reductions at both JPMorgan and Bear Stearns as JPMorgan completes its acquisition of the investment bank. It would not specify how many.[13] Sioux Falls might suffer some job cuts in the latest downsizing. Tarter said most of the cuts will occur in its consumer business, which would include Citibank, consumer finance and the credit card business. This round of cutting includes businesses the company has sold or will sell off, Tarter said.[25] Pandit, who took over Citi in December, indicated cuts in operating expenses will not only come from reductions in the 370,000-strong workforce, but also from improvements in computer systems and a greater focus on core businesses. 'It is clearly feasible for us to take 10, 15, 20 percent off our cost base, especially in information technology and operations,' Pandit told the newspaper. Pandit rebuffed calls for a break-up of the company, but said he plans to sell any part of Citi that doesn't fit with the company's core businesses.[52] Net interest margin for the quarter is 2.83%, 30 basis points sequentially and 36 basis points over the prior year period. The primary driver of this improvement is from significantly lower cost funding and driven primarily by deposits and Fed funds which are reflecting the benefit of the Fed rate cuts.[10] Partially offsetting the benefits from lower funding costs was a decrease in asset yields primarily related to Fed funds. In the sequential quarter comparisons, the assets were down sharply last quarter and remained virtually flat this quarter. This is primarily due to an increase in trading assets driven by higher revaluation gains from interest rates, the impact of foreign exchange and derivative investment movements offsetting a decrease in Fed funds sold.[10] As in the past, an adjustment was made for the geographic concentration of the relevant mortgage pools. Second our methodology for calculating the discount rate was refined this quarter. In the past year we used observable CLO spreads and applied a liquidity discount to those spreads to arrive at our discount rate. This quarter we have used a weighted average combination of the implied spreads from single named ABS bond prices and ABX indices and CLO spreads depending on vintage and asset types. This refinement was made in part in response to the combination of continuing rating agency downgrades of RMBS and ABS CDOs and a lack of CLO spreads at the resulting rating levels.[10] I believe that we finally have the right organization structure focused on clients, product excellence and execution. Other announcements we'''ve made this quarter include repositioning of our wealth management business, the realignment of our mortgage business and the sale of non-core assets that Gary'''s talked about.[10]

We also had a $250 million reserve to facilitate for global wealth management clients and exit from a specific Citi managed fund and a $200 million write down on the hedge fund intangible assets related to Old Lane. Offsetting these were three items. [10] In addition we took a $355 million write down on municipal bonds and $132 million write down on tax exempt and other assets.[10]

On the alt A portfolio, obviously you guys have $22 billion there and looking at the write down of $1 billion, when you compare that to kind of other industry participants who have taken things down to $0.70 on the dollar, it just seems like it'''s a little light. [10] We took the $1 billion in write down against the trading book essentially.[10]

In global transaction services as Vikram mentioned, revenues increased 42% to a record $2.3 billion driven by higher customer volumes, stable net interest margins, and the acquisition of Bisys Group which close in August of 2007.[10] The bank has taken more than 30 billion dollars in write-downs since the crisis, more than investment bank Merrill Lynch, which reported Thursday a net loss of nearly two billion dollars and nine billion dollars in write-downs.[17] Since the middle of 2007, Merrill Lynch has taken about $29 billion in write-downs.[44] The latest new write-downs included $6bn on sub-prime related exposures, a further $3.1bn relating to leveraged loan commitments, and $1.5bn due to bond insurance revalutations.[39] The most significant mark downs have been taken on student loan paper where we recorded a $971 million mark to market loss as ABS spreads widened significantly.[10] Standard & Poor's said today it is reviewing Citigroup's rating for a possible downgrade, noting that earnings may be further depressed by loss reserves on the bank's loan portfolio.[15] Everybody has issues," MacLeod said. Compared to other banks, he noted, the rate at which Citigroup is having to write off loans is particularly high in relation to the amount of loans on its books that are in default or close to default. "That's going to be a serious concern for the company going forward."[27]

Much of the bank's revenue was better than expected, and the combined news sent Citigroup's shares higher by 9% in premarket trading.[11] Analysts, on average, had expected the New York bank to lose 95 cents per share, according to Thomson Financial.[45] Analysts, on average, had expected the New York bank to lose 95 cents per share, according to a Thomson Financial survey. The Associated Press contributed to this report.[25]

Analysts, on average, had expected the New York-based banking company to lose just 95 cents per share, according to a Thomson Financial survey.[27] Excluding the previously announced charge of 54 cents per share, the company earned 27 cents per share in the period, matching expectations of analysts in a Thomson Financial poll.[45]

Michael Levine of Oppenheimer says traders were relieved because the write-downs were much lower than expected, even though earnings per share were lower. MICHAEL LEVINE, PORTFOLIO MANAGER, OPPENHEIMER FUNDS: I don't think anyone was looking at this quarter as far as earnings per share, the earnings power of the company.[51]

'Does a hedge-fund manager really have the ability or the desire and skill set to run a retail franchise?' said Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati, which owns more than 2.3 million Citigroup shares. Citigroup said it expects investors to withdraw money from a multi-strategy fund operated by Old Lane because management changes give them the option to pull out. John Havens and Brian Leach, two of Pandit's partners at Old Lane, are now in senior management roles at Citigroup. 'One has to assume that if they are expecting redemptions that performance was not up to par,' Bobroff said.[35] "We're very, very focused on efficiency," Pandit said. Citigroup, like most other large banks, has been aggressive in writing down its assets to market value and that the biggest write-downs may have been taken already.[13]

Citigroup's write-down represents just a fraction of the investments that banks, mortgage lenders, and insurers have seen diminish in value as poor bets in the mortgage market came to light.[44] Only Switzerland's UBS has reported bigger write-downs and credit losses than Citigroup from the collapse of the sub-prime mortgage market.[43] Oppenheimer & Co. analyst Meredith Whitney wrote in a March 27 report that Citigroup's growing consumer-loan losses may force it to raise more capital. Crittenden said in January that the bank wouldn't need to raise more capital, and that its assumptions were "stress- tested'' against a range of economic conditions, including "multiple recessionary scenarios.''[15] "We're kind of at the beginning of the cycle" in seeing losses from credit- card loans, said Gary Crittenden, chief financial officer of Citigroup Inc. (C), in an interview on Friday.[49] Sources said last week that the average price of the loans was expected to be just below 90 cents on the dollar. Citigroup's latest writedown and redundancies cap a week in which several rivals have announced similar sub-prime-related losses and cost-cutting measures to tackle them.[3]

I started my Citgroup position under similar circumstances when th bank took catastrophic losses with the Mexican loan default.[12]

Data at other banks show similarly accelerating trends. "We're in a recession, and this is what happens during a recession," said David Weiss, chief economist at Standard & Poor's. There's a twist, says Weiss: Historically, when a recession hits Main Street, consumers who are strapped for cash first stop repaying their credit- card loans and only stop paying their car and home loans when conditions grow worse.[49] Banks are expecting more loans to go sour, and consumers can expect tight lending standards for many months -- perhaps years -- to come.[13]

This was a little more than I think you should plan on going forward. As you know there'''s a part of this that comes from the investment bank and there'''s a part that comes from the consumer bank. If more of this benefit had come out of the consumer side I'''d feel better saying that'''s it'''s sustainable at this kind of a movement up. A lot of this improvement in this particular quarter came out of the trading parts of the CMB in the markets and banking business. So I don'''t think you should extrapolate off of this kind of improvement you know we could even see some backtracking against that as we settled down to some more normalized levels. Obviously we had nice improvement in the quarter but I wouldn'''t necessarily use this as a basis from which you would do a projection.[10] Fitch cited deteriorating earnings in the consumer business and investment bank losses.[15] Mexico and India accounted for approximately one-quarter of the net credit losses and three-quarters of the reserve build in the international consumer business.[10] First in the period from 1989-1992 lasted eight quarters during which unemployment increased by approximately 200 basis points and housing prices declined by more than 5% and our net credit losses increased by 175 basis point.[10]

To summarize our first quarter results, net revenues declined 48% driven by the continued disruption in fixed income markets, partially offset by underlying growth in several of our other businesses.[10] Slide 4 shows the first quarter year over year revenue growth in each of our major businesses.[10]

Transaction revenues were actually quite strong in the fourth quarter, have weakened a little bit as we have come through the first quarter and tend to go down during time periods where customers are concerned about what the levels of equity markets are going to be. Both of those things impacted their revenues in the quarter. Obviously focusing on flows is a key initiative that Sally has underway and one of the things that she has done is she has revised the FA comp plan to specifically provide incentives to our FA team to increase customer flows.[10]

Within fixed income markets, we had very good results in our client related or floor rates and currencies businesses with revenues up 17% versus a year ago and up 52% versus last quarter.[10] Key revenue drivers continued to grow at strong double digit rates with each of the three major businesses, cash, securities and fund services and trade posting record revenues. In equity markets, prime finance had its second strongest quarter in revenues driven by a number of new account acquisitions and increased customer activity.[10]

So that loss rate calculation can go up because of things like that acquisition noise where the underlying delinquencies can remain relatively flat. So you know as I said we look at each one of these things individually, there'''s some noise in it from quarter to quarter but we feel like we'''re properly reserved for that at this point in time. Now, having said that we'''re carefully watching Mexico, we'''re carefully watching India and we'''ll be reporting on that to you as we go forward and we'''re very focused on taking the right actions in those markets to ensure that credit doesn'''t deteriorate beyond what you know what our forecast would indicate that it will.[10]

Xerox announced March 27 that it received approval to settle a securities lawsuit dating to 2000 and that it would take a $491 million charge related to the settlement. It did not admit to wrongdoing and agreed to settle to save time and money. [45] Upon VISA'''s funding of the escrow account, Citi release $166 million of a previously established reserve based on the pro rata Citi ownership of VISA shares.[10] Shares of Citi recently were popping 7.5% to $25.83, as investors' worst fears were side-stepped by the firm, analysts say.[38] On average, analysts surveyed by Thomson Financial were looking for a loss of 95 cents a share, meaning Citi was worse than expected.[38] 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 U.S. housing slump in decades and signs of recession in the world's biggest economy.[18]

Citigroup is now the U.S. 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. [17] Citigroup's loss points backward to the giant bank's risky and poorly managed foray into complicated debt markets but also heralds growing stress on U.S. consumers.[30]

"The potential depth of problems across Citi's U.S. consumer portfolio will likely make a restoration of desirable financial metrics a 2009 event at the earliest," the ratings company said. In other words: Good times may be coming, but they probably aren't coming soon.[11] This is "good news for Citi and Merrill," said Arthur Hogan, chief market analyst with Jefferies in Boston. "And everybody in financials thats had a well-known exposure to subprime, this is the quarter they get to clear the decks."[33] Analysts expect further write-downs for credit card and home equity debt for Citi and other financial institutions.[51] JPMorgan Chase analyst Kenneth Worthington said Merrill Lynch's earnings don't indicate a market bottom. Merrill's write-downs were in line with his estimates, but its trading results were "disappointing" and will likely shrink throughout the year, he said. As more companies report results in the coming weeks, investors will get a better sense of where the sector stands, but in the meantime, Morningstar's Lentell said he expects financial stocks to remain volatile.[44] I have to agree with the commenters above- Citigroup loses 20 billion dollars this year, one of many financials to do so, they get bailed out- they lose only x billion more, their stock is up 1 + today.[29]

Last quarter, Citi identified 4,200 jobs for elimination, mostly in investment banking, in addition to the 17,000 identified a year earlier by Prince. [38] Although Wall Street accounts for just 5 percent of the jobs in New York, it provides nearly a quarter of all wages in the city.[32] We have been very vigilant in managing that exposure and each quarter we evaluate exactly what our position is and we are very careful to take you know the reserves against that business that are necessary. This is you know a difficult business environment, there are no easy solutions here, no silver bullets and our intention is to manage this as effectively as we can and to ensure that we'''re reserving each quarter for whatever exposures of all. This happened to be a quarter where there was not a lot of news around that business fortunately but that shouldn'''t take away from the fact that there'''s still risk associated with that and you know but we'''re just managing it as I said in my comments.[10]

Jason Polun of T. Rowe Price says that does not mean Citi is out of the woods. JASON POLUN, PORTFOLIO MANAGER, T. ROWE PRICE: We're actually getting more visibility into some of these legacy risk assets where they're taking these big charges. Incrementally after this quarter, we feel better about that.[51] Scott, thank you, good morning everyone. To start with, we'''re not happy with our financial results this quarter. Although they'''re not completely unexpected given the assets we hold.[10]

The alternative investments revenue decline reflects sharply lower revenues from our proprietary activities and the write down of some of the SIV assets. Offsetting these results was revenue growth in international consumer and global wealth management driven by both organic growth and acquisitions.[10] In the latest quarter, Citigroup's global consumer division had a 45% drop in profit despite a 16% rise in revenue.[30]

The private bank had a strong quarter with net income up 27% due to robust domestic and international revenue growth.[10]

It is incremental so we announced 4,200 last quarter, we announced 9,000 this quarter. The way to think about this is these are the heads that we can reserve for 12 months in advance. You'''re kind of limited to taking reserves for a 12 month time period and so this is you know the severance that we have paid out to these individuals or will pay out to these individuals, so these are identified positions. The way I would think about this is that we will continually as we go through the year be focused on reengineering. [10] "We're in the active process of divesting businesses, and that's a lumpy process almost by definition," Crittenden said on the call. "There's no assurance that the amount of marks we've taken in this quarter are finished. We're three quarters into this; I think we have substantially reduced our amount of risk, but there is always the prospect that you could have additional marks, and that throws the calculation of that number pretty much out the window. "What I would say is I think you should hold us accountable for a couple of things -- that we make significant progress on head count and that we make significant process that is discernible in our numbers on expenses," he added. "Those are things that you should be able to see if we're dong a good job on re-engineering.[38]

And, oh yes, another 9,000 jobs would be cut, for a total of 13,200 since the past quarter.[42] Citigroup said Friday it is reducing its work force by an additional 9,000, positions. It announced 4,200 job cuts in January.[13] Of the 9,000 layoffs at Citigroup, at least 2,000 have already been announced in the investment banking unit, and executives are looking to trim staff jobs in legal and technology where there is a significant overlap.[2]

On a conference call today, the bank says that it will be cutting an additional 9,000 jobs. Citi has already been cutting jobs--more than 4,000 announced earlier this year--reorganizing businesses and selling some units, like Diners Club.[32]

Citi said it had concluded the sale of around $12bn in leveraged loans to a conglomerate of private equity groups including Apollo, TPG and Blackstone. [28] "Sioux Falls would be less affected than the average (Citi location)," said Michael Keller, dean of the Beacon School of Business at the University of South Dakota. "Their credit card operation is doing well and not necessarily impacted by subprime home loan problems." Citi's operations on the northeast side of Sioux Falls are spread across 380,000 square feet in three buildings where its primary operations are credit card processing and student loan applications, said Jerry Nachtigal, local Citi spokesman.[25] Guy I'''ll take the question, you know if you look at most card competitors that have businesses that are outside the U.S., you know card businesses outside the U.S., generally you find the loan loss reserve to be somewhat lower outside the U.S. as it is in the U.S. And importantly for us if you look at the 90 day delinquencies in the card business or in our international card business or in our international retail banking business, the 90 day delinquencies are dead flat with a year ago, in fact they'''re slightly better than they were a year ago.[10] sell our loans to some sucker bank. The blame and responsibility here goes to the home owners that got in over their heads, and the unethical mortgage companies that sold all these doomed loans from the beginning. The U.S. tax payers dont need to bail them out.[12] Poor little rich banks. Their press release should have read "We made too many loans to folks with bad credit. Imagine our surprise when they could not pay their bills."[12]

Another question on capital, what are your thoughts for needing additional capital and I understand that'''s in the context for your outlook for problem assets, you mentioned consumer credit is likely to get worse this year. [10] As the graph shows, all of our capital ratios declined during 2007 driven primarily by acquisitions, organic growth in assets and negative earnings in the fourth quarter.[10] Now slide 18 provides vintage and rating data for each of the exposure types. 82% of the collateral backing asset backed CP, the asset backed CPs that we hold is of 2005 or earlier vintages as no ABCP transactions were originated after early 2006. The collateral backing the high grade and mezzanine CDOs have a higher proportion of 2006 and 2007 vintages as those transactions were primarily originated in 2006 and 2007. 89% of the ABCP portfolio has a credit rating between single A and triple A. Another impact of vintage can be seen in the downgrades that have occurs within the collateral pools of high grade ABS CDOs which initially owned collateral pools with an average rating around double A. Our CDO research team looked at all high grade ABS CDOs and found that for those transactions which were issued in 2004 and 2005 which would include most of our ABCP transactions, approximately 10-12% of the collateral pool has been downgraded to triple B or below.[10]

Its only at times like these that you are able to buy an institution like C for $25. For those who would have rather bought it at $12 as Whitney promised (so would I have and I did keep some firepower available), its likely to be an unfulfilled wet dream. The real question is, with all its problems, are we going to be able to see C below 20 or should we plunge in now. For those with no positions at all, it would be advisable to at least nibble. [29] The current period included a $212 million pretax write down of an equity investment held by Nikko Cordial.[10] I mean $120 million of the write down was associated with the 15.4, the large, the top right hand side of slide number 19. $120 million of the write down was associated with the 15.4; the remainder was associated with the 6.7.[10]

A $282 million benefit from a legal entity restructuring in our Mexico business in March of 2008.[10]

The disappointing showing in the wealth-management business -- which includes the Smith Barney retail brokerage and a private bank catering to ultrarich individuals -- illustrates a pitfall of Citigroup's "universal bank" model, in which a diverse array of businesses are supposed to complement each other and yield superior results.[16] SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Analysts called the Citigroup results a mixed bag.[51]

As usual we have shown you our results with and without the Japan consumer finance business. As the results showed, Japan consumer finance did not have a major impact on our business during this quarter.[10] I think it'''s unlikely that you will hear some very large significant number that we'''re going to announce but I think it'''s highly likely that you'''ll continue to hear that we'''re very focused on improving our cost competitiveness and as a result are consistently working away from a productivity perspective. If you split the two of these pieces out on the consumer side about 7,000 of the 9,000 comes from the consumer business and the actual number is 9,300, 1.3 comes out of, I'''m sorry, yeah, so the actual number is 9,000, 1.3 comes out of the commercial banking business.[10] I think there are a couple of things there, the federated impact is included in those numbers and so there'''s some mix change associated with that portfolio. There'''s also if you look at the way LIBOR and Fed funds have moved together and in fact this is I think the primary factor, some of our pricing takes place off of the Fed funds rate while our underlying funding cost is based off of LIBOR and the combination as you know, LIBOR and Fed funds have not moved in concert in the same way they have over the course of the last couple of years.[10] Turning now to slide number 8 on credits, it shows the year over year growth rate in the components of our total cost of credit and the key drivers within each component.[10] The credit crunch has pushed rates up by an average of 0.35 per cent since January, adding about 75 every month to the cost of a 300,000 mortgage.[23]

Management attributed the historic switcheroo of earnings contributions to 'higher expenses and credit costs' at Smith Barney, and 'increased customer activity' in the private bank.[1] We are building reserves to manage our expectation of higher credit costs and are working actively to mitigate credit costs within our portfolios.[10]

The Financial Times reported that Pandit said cost cuts will focus "especially in information technology and operations." [53] An analyst should not recommend a stock that can't be understood from it's balance sheet and has publicly lied (that crap about no dividend cut is a lie, just like last time) in the last 6 months. These analysts should just be ignored. read some reggie middleton if you want to know what's really up with the banks and brokers.[29] The bank said the 9,000 additional cuts will take place in the next year, including about 7,000 in consumer banking.[9] The new cuts will come over the next year and will include about 7,000 in its consumer banking operations, it said.[41]

Emmert/Getty Citigroup said the 9,000 additional cuts will take place in the next year.[9] Medema noted that only a year ago, Citi cut 17,000 positions when the company underwent a vast worldwide restructuring.[25] Janis Tarter, a Citi spokeswoman, said the company won't provide details on the number of job cuts per location. With more than 300,000 employees across the world, "the impact to any specific location (of the job cuts) would be minimal," she noted.[25] Job losses will surge well beyond that, officials said, given that the latest data does not account for widely expected cuts among the 14,000 employees at Bear Stearns after JPMorgan Chase rescued the broker from bankruptcy.[9]

The brokerage also plans to cut more jobs. Its shares rose 4% on Thursday.[42]

The bank has had to raise additional capital through investors by selling new shares, which have the effect of diluting the value of current shares.[19] Wells Fargo shares gained 4.3 percent Wednesday after the bank reported results, and ended the week up 8.6 percent.[44]

The bank ousted CEO Chuck Prince late last year and promoted Pandit, a former Morgan Stanley investment banker, as it scrambles for cash. [37] Expenses in the quarter grew 4% versus last year and foreign exchange accounted for 3% of that growth.[10]

Analysts have forecast the company may eliminate about 25,000 jobs over the next few months after two years of rapid growth, according to the newspaper.[21] Citigroup's Crittenden told analysts on Friday that today's bad market for consumers is, in some ways, unprecedented, meaning future losses can be difficult to forecast.[49] Morgan Stanley analyst Betsy Graseck said the bigger-than-expected consumer- credit hit is bad news for investors, as problems in that area will take longer to work out than the capital-market losses.[11]

For example, when we acquired Egg, that'''s primarily an international card portfolio, the losses that are imbedded in the card portfolio at the time that we do the purchase end up in the goodwill rather than being imbedded in the loss rate calculation.[10] The first one occurred in 2005 as a result of a large private label portfolio acquisition which carried higher losses. The second one occurred in 2005 and 2006 periods and related largely to the change in bankruptcy legislation and the aftermath of Hurricane Katrina. Putting those two events aside, there are three clear periods in the chart where losses have increased steadily.[10] The months of coverage that we currently have are around the losses that we have in that portfolio and we'''re watching it very vigilantly. It is in fact trending up as you saw very significantly during the course of this quarter.[10] Citi stored their losses this quarter on the Fed's balance sheet, trading junk for money.[29]

Two quarters in, unemployment has risen by only 40 basis points and housing prices are already down 7.8% and losses on our card portfolio have increased by more than 125 basis points.[10] It'''s primary funding essentially, it is you know we obviously have interest rate hedges to try and protect us from you know negative surprises in the environment and obviously there was a, interest rates have improved somewhat during the course of the quarter and so that'''s an impact on that. We also have losses in our AFS book which at this point are not fully recorded in our regular income statement and in addition to the losses on those interest rate positions, the losses that we have on those AFS positions are recorded through that particular line item OCI.[10]

With respect to that international delinquency rate which as you correctly point out is very, very consistent, it doesn'''t really seem to predict either very significant increases or decreases in the coincident loss rates and we did see that loss rate pop up on the international cards by a couple hundred basis points again this quarter on a 12 month lag basis or a coincident basis actually.[10] The impact of acquisitions in any given quarter can have a fairly significant impact on the loss rates.[10]

For the second quarter running, the company posted a huge loss and took big write-downs.[51] Crittenden cited additional write-downs that had not appeared in a list of write-downs and the company's earnings report, which AFP had tallied that list at approximately 12 billion dollars.[17]

UBS analyst Glenn Schorr said that while Citigroup's earnings outlook was not great, the financial services company is finally showing some stability.[17] Citigroup (NYSE: C), which is a New York-based global financial services company that provides a broad range of financial products and services. Other major brand names under Citigroup's trademark red umbrella are: CitiFinancial, Primerica, Smith Barney, Banamex and Citibank.[40] NEW YORK (Associated Press) - Citigroup Inc.' s quarterly report Friday capped a week of news from financial companies that wouldn't typically be viewed as good enough to help push the sector and the overall market higher if it weren't for the carnage that preceded it.[44]

When one Citigroup Inc. unit sneezes, another seems to catch a cold. The phenomenon was on display Friday, as Citigroup reported that first-quarter profit in its wealth-management division, long considered a crown jewel of the financial empire, fell 33%, dragged down by the poor performances of internal hedge funds that were ravaged by turmoil in the credit markets.[16]

Investors, however, responded to Citigroup financial results, which contained few surprises, as well as a good earnings report from Google by pushing the markets sharply higher.[2] Before we get started I'''d like to remind you that today'''s presentation may contain forward looking statements. Citigroup'''s financial results may differ materially from these statements so please refer to our SEC filings for a description of the factors that could cause our actual results to differ from expectations.[10]

All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) who may or may not have a position in any company or advertiser referenced above. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility.[16] The company has approximately 17,000 employees in Texas in all Citigroup business.[40] We have some other risk issues that we'''re on top of that Gary will talk about more. Through all of this, even as we expect economic news to be challenging, my confidence in this company'''s abilities and our future is extremely high. I'''ll share some of these thoughts with you towards the end.[10] Only a very few financial professionals who target the affluent are bringing in 10 or more new affluent relationships each year. This book shares the Mindset, Activities and Skills of the Rainmakers who consistently achieve this level of success.[1]

Citigroup's news is the latest in a wave of dismal bank earnings reports over the past week. [12] Financial stocks rallied during the week as some of the nation's largest banks reported declining first-quarter earnings, but still managed to beat analysts' expectations.[44]

Citibank also has slashed costs and reorganized the bank's mortgage business and wealth-management unit.[4] The bank employs more than 2,000 people in Dublin and Waterford. A spokesman for the bank said: "It would be inappropriate to speculate on the local nature of the jobs cuts." He added that the bank's Irish operations were among its fastest growing and were a very significant part of its business.[23] JPMorgan Chase is expected to eliminate a majority of Bear Stearns' 14,000 jobs. Meanwhile Royal Bank of Scotland is considering the launch of a massive rights issue to strengthen its capital reserve.[36]

Medema and other business leaders in Sioux Falls are paying close attention to Citi because it was at the forefront of coming to the city in the early 1980s and creating what has become a cluster of call center and financial services businesses. That influx of financial service businesses has generated thousands of direct and indirect jobs for Sioux Falls, said Ralph Brown, an economics professor at the University of South Dakota. "Citibank put Sioux Falls on the map when they decided to locate here," Medema said. "They continue to have impact."[25]

Citi's Leverage Grows Quick Hits: Citi's Leverage Grows Despite Dumping Assets. Despite a flurry of recent actions to clean up its balance sheet, Citigroup's (C) leverage continues to rise.[16] You guys showed the net asset flows. They looked like for the last four quarters anyway, actually you go up on the flows five quarters; you haven'''t had much of inflows.[10] The global wealth division had a net loss of 213 advisors for the quarter, leaving it with 15,241 advisors.[34]

Our reserve actions for our mortgage portfolio primarily reflected significant deterioration. One point to note, the FICO, LTV and delinquency distributions for our first and second mortgage portfolios that we have shown you in the past few quarters have remained consistent and therefore we have not included them in this presentation.[10] As a percentage of the total first mortgage portfolio, 33% of the buyer selected low documentation loans have a FICO score above 660 and an LTV below 80% as shown in the box on the left. For the same FICO and LTV band, the entire first mortgage portfolio has a delinquency ratio of 1.6% versus 2.2% for this subset of loans as shown in the box on the right.[10] The box on the left shows you the FICO and LTV distribution of the loan balances as a percentage of the entire first mortgage portfolio.[10]

Conversely in instances, I'''m sorry, in extreme cases represented by a FICO band below 620 and an LTV at or above the 90% band which had a delinquency rate almost 3 times as high as the corresponding cell in the first mortgage portfolio. Importantly this cell represents only 1% of the first mortgage portfolio.[10]

I wanted to follow up on your discussion of consumer allowance for loan loss compared to the coincident write off rates. [10] Delinquencies rose on mortgages, unsecured personal loans, credit cards and auto loans.[15] The credit crunch resulted in the collapse of U.S. banking giant Bear Stearns and is being felt in the wider economy as consumers pare back debt-fuelled spending and grapple with higher mortgage payments.[43]

As a consequence of the capital raising we did in the first quarter, our tier one ratio was 7.7% exceeding our internal target. [10] Slide number 13 shows the historical trend in a number of our key capital ratios as well as the progression in our tier one ratio from the fourth quarter to the first quarter.[10]

One of Mr Pandit'''s first moves has been to centralise IT decisions in New York under chief administrative officer Don Callahan, a close ally. [8] Let me spend a minute on each. During the quarter Old Lane'''s management team sent out letters to investments on its multi-strategy fund offering them redemptions in light of the change in the management at Old Lane. It is our expectation that a number of investments will redeem from this fund as they consider possible reinvestment in new Old Lane funds.[10] Crittenden said the expected cuts are in addition to the 4,200 workforce reduction announced in the previous quarter.[18] The bank announced 4,200 cuts in January, and more workforce reductions are likely.[4] The bank announced 4,200 cuts in January, about 9,000 Friday and suggested more work-force reductions are likely.[13]

Additional cost reductions are likely to be announced in future quarters, Crittenden said. [15] We are dedicated to ongoing reengineering. Now there'''s going to be some dispositions that are going to take place in this quarter and in future quarters as we had in this quarter and in this quarter the amount of income from dispositions actually exceeded the amount that we took in severance charges and I don'''t know whether that will happen perfectly in all the quarters that we have going forward, but we obviously are making an effort to be thoughtful about when those severance charges hit and the timing at which we decide to sell certain of our businesses. So we'''re going to try and you know operating the business in such a way that provides some consistency going forward.[10]

SOURCES

1. Citigroup Posts Q1 Loss; Smith Barney Unit Lackluster, Too
2. Citigroup Records a Loss and Plans 9,000 Layoffs - New York Times
3. Citigroup writes off another $15.2 billion and plans 9,000 job cuts - Times Online
4. TheStar.com | Business | Citigroup reveals $5.1 billion U.S. loss
5. Citigroup unlikely to cut jobs in the Middle East
6. Citigroup bank cuts British jobs - Telegraph
7. Bad News Really Is Bad News For Citi - Forbes.com
8. Citigroup'''s Pandit declares major cost cuts
9. Citigroup cutting 9,000 jobs
10. Citigroup Inc. Q1 2008 Earnings Call Transcript - Seeking Alpha
11. 4th UPDATE:Write-Downs Send Citigroup To 2nd-Consecutive Loss
12. Citigroups Write-Downs Lead to .1 Billion Loss - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times
13. newsobserver.com | Ailing Citi to cut 9,000 jobs
14. Citigroup reports $5bn loss and sheds 9,000 jobs - Business News, Business - The Independent
15. Bloomberg.com: Worldwide
16. Articles
17. AFP: Citigroup posts 5.1 bln dlr loss, to cut 9,000 jobs
18. AFP: Citigroup posts $5.1 bln loss, hit by subprime crisis
19. Citigroup Takes $5.1 Billion Loss, Cuts 9,000 Jobs - International Business Times -
20. Bloomberg.com: U.S.
21. Bloomberg.com: Worldwide
22. Citigroup posts $5.11 billion first-quarter loss | Reuters
23. ireland.com - The Irish Times - Sat, Apr 19, 2008 - Citigroup announces 9,000 job cuts after 3.2bn loss
24. Citi Plans 9,000 More Job Cuts In 2Q
25. Citi to shed 9,000 jobs | argusleader.com | Argus Leader
26. European shares add to gains after Citi results | Markets | Markets News | Reuters
27. Relief Rally For Citi - Forbes.com
28. Citi'''s $5.1bn loss emphasizes depth of crisis
29. Citigroup's Flush - Seeking Alpha
30. UPDATE: Citi Posts 1Q Loss On More Than $13 Billion In Write Downs
31. Citigroup cuts prove industry will move to conservative mode 04/19/08
32. Citi Reports Big Loss - Portfolio.com
33. Citigroup posts $5.1 billion loss; Royal Bank of Scotland to raise funds - International Herald Tribune
34. Bad News at Citi - Articles - On Wall Street
35. Citigroup CEO Pandit writes down hedge fund he owned
36. Document: Financial Crisis: More job losses
37. The Associated Press: Citigroup posts loss, plans to eliminate 9,000 jobs
38. Citi Rallies Despite Writedowns, Job Cuts | Financial Services | C JPM MER WB - TheStreet.com
39. Citigroup vows to keep cutting costs and staff - Telegraph
40. Citigroup plans to eliminate 9,000 jobs - Dallas Business Journal:
41. Citigroup cutting thousands more jobs - New Mexico Business Weekly:
42. Citi Chops Jobs, Loses $5 Bil, And Investors Find Hope
43. inform.kz | 163389
44. Financial stocks rally as 1st wave of earnings are reported
45. Citigroup Cuts 9,000 Jobs; Xerox Posts Loss -- Courant.com
46. On the Watch: Citigroup to report 1Q results
47. Citigroup to trim 9,000 jobs -- chicagotribune.com
48. Citigroup posts loss
49. Consumer Loan Losses Could Extend Credit Crunch
50. Citigroup may cut 24,000 jobs - UPI.com
51. Nightly Business Report . Citigroup & Caterpillar Calm The Volatile Markets | PBS
52. Citigroup to cut costs by up to 20 percent - CEO - Forbes.com
53. Citi CEO Pandit to cut cost base by up to 20%: report - MarketWatch

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