Citigroup Reports $5.1B Loss, Cuts 9,000 Jobs
Hefty write-downs related to mortgages
and tightened credit reached about $12 billion, and costs tied to consumers’
credit problems surpassed $3 billion, the bank said Friday, according to The
The loss of $5.1 billion, or $1.02 a
share, off its total investment portfolio was deeper than Wall Street had
expected and took the bank’s total loss over the past two quarters to nearly
$15 billion, the Wall Street Journal reported.
In a conference call, Citigroup chief
financial officer Gary Crittenden said the bank, seeking to cut costs, is
eliminating about 9,000 additional jobs. The additional job cuts mean Citigroup
has announced 13,200 jobs cuts in all this year, saying in January that 4,200
jobs would be eliminated.
According to the AP, in the first
quarter, before taxes, Citigroup took $6 billion in write-downs and credit
costs on exposure to subprime mortgages; $3.1 billion in write-downs on funded
and unfunded highly leveraged finance commitments; 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 $3.1 billion in credit costs for
consumers around the world.
Still, those write-downs were smaller
than the $18.1 billion in write-downs Citigroup reported after the fourth
“It’s a cathartic quarter,”
Arthur Hogan, chief market analyst at Jefferies & Co in New York, told the BBC of the Citigroup
The latest round of portfolio losses and
job cuts come as the bank works to retool the company and react to the housing
and mortgage crisis.
The bank ousted CEO Chuck Prince late
last year and promoted Vikram Pandit, a former Morgan Stanley investment
banker. Pandit has since pursued cost-cutting measures, vowed to pursue new
product markets and reorganized the company’s organizational structure,
according to a New York Times analysis.
“We are taking the necessary steps
to make Citi more efficient while fostering a culture of accountability and
teamwork,” Pandit said in a statement. “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.”