The nation's largest bank wrote down the value of its portfolio by $18.1 billion and said it was setting aside $4 billion to cover U.S. consumer credit defaults. It signaled further problems in its consumer businesses as deflated home prices, high energy and food costs, and rising unemployment weigh on people's ability to keep up with their payments.
The reduction of 4,200 jobs in the fourth quarter is in addition to 17,000 layoffs announced in the spring, and Chief Financial Officer Gary Crittenden said during a conference call that more job cuts would be on the way.
Chief Executive Vikram Pandit, who replaced Charles Prince in December, said the fourth-quarter results were "unacceptable," and that he was "not yet finished" in his review of whether any of the global bank's core operations need to be cut or sold.
To bolster its capital, the bank also said Tuesday that it has lined up $12.5 billion in new investments from sovereign wealth funds and existing shareholders.
That includes $6.88 billion from the Government of Singapore Investment Corp. for a 4 percent stake. Other investors were Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of
The $12.5 billion in fresh equity adds to the $7.5 billion Citi got in November from the Abu Dhabi Investment Authority in exchange for a 4.9 percent stake in the company.
Citigroup's shares, which were trading at about $55 a year ago, fell $1.98, or 6.8 percent, to $27.08 in morning dealings Tuesday.
The loss for the quarter totaled $9.83 billion, or $1.99 per share, compared with earnings of $5.13 billion, or $1.03 per share, during the same quarter a year earlier. Citigroup's revenue fell to $7.22 billion, down 70 percent from $23.83 billion in the final quarter of 2006.
Citigroup said the 41 percent cut in its quarterly dividend to 32 cents a share from 54 cents -- along with the Asian investments and a stock offering of about $2 billion -- will help boost its Tier 1 capital ratio, a measure of its financial strength. But it will also dilute the value of shareholders' stock.
Financial companies have been the highest dividend-paying sector in the stock market, but many -- including Washington Mutual Inc., National City Corp. and the government-sponsored lenders Freddie Mac and Fannie Mae -- have pared those payouts in recent months.
Citigroup's decision to cut its dividend and seek new cash from outside investors was widely anticipated on Wall Street after months of scrutiny surrounding the bank's deteriorating operations. The biggest was Citigroup's bad bets on mortgage-backed bond instruments called collateralized debt obligations. It also was forced to bring onto its books $49 billion in hemorrhaging funds known as structured investment vehicles.
During the past several weeks, Asian funds have been buying up the battered stocks of struggling U.S. banks. Early Tuesday, Merrill Lynch said it will receive a total of $6.6 billion from the Korean Investment Corp., Kuwait Investment Authority and Japan's Mizuho Corporate Bank -- in addition to the $4.4 billion it has gotten from Singapore's state-run Temasek Holdings.
Pandit said Citigroup would continue to sell "noncore" assets. The bank has sold shares in Redecard, a card business in Latin America, and an ownership interest in a unit of the Japanese brokerage Nikko Cordial it bought last year.
Citigroup's $18.1 billion write-down was significantly wider than the $6 billion write-down it took in the third quarter last year, and bigger than the $8 billion to $11 billion it guessed in October that it would take for the fourth quarter.
Citigroup said that as of Dec. 31, it had a total of $37.3 billion in direct subprime mortgage exposure, down from $54.6 billion three months prior.
It was not all bad news for Citigroup, as the bank recorded record results in its international consumer, transaction services and wealth management segments.
But the bank's strengths were not nearly big enough to offset its weaknesses.
Citi's full-year net income for 2007 fell 83 percent to $3.62 billion, or 72 cents a share, versus a year ago.