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 quarter.
“It’s a cathartic quarter,” Arthur Hogan, chief market analyst at Jefferies & Co in New York, told the BBC of the Citigroup report.
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.”