US bank Citigroup has reported its first quarterly loss since its creation in 1998, reporting a net loss of just under $10 billion for the last three months of 2007. The loss was roughly twice as large as analysts had expected.
The bank was hurt by $18.1 billion of write-downs in the value of investments linked to US sub-prime mortgage debt. It also said US credit losses increased $4.1 billion, largely because more consumers are falling behind on payments.
Citigroup also said it was raising at least $14.5 billion and cutting its quarterly dividend 41% to help shore up a capital base depleted by the losses.
It said it was raising $12.5 billion from a private sale of shares. It said this included $6.88 billion from a fund affiliated with Singapore's government.
The bank also said it included investments from the Kuwait Investment Authority, Saudi Prince Alwaleed bin Talal, the asset management firm Capital Research & Management, the state of New Jersey, and former Citigroup CEO Sanford Weill. Citigroup also plans to sell $2 billion of shares other investors.
'We are taking comprehensive action to position Citi for the future with the capital strength that will allow us to refocus on earnings and earnings growth,' Vikram Pandit, who became chief executive in December, said in a statement.
Citigroup said that if it completed the private share offering and its planned purchase of Japanese brokerage Nikko Cordial, its Tier-1 capital ratio would be about 8.2%, above its target. The capital ratio measures the bank's ability to cover losses.
Citigroup reduced its quarterly dividend to 32 cents per share from 54 cents, which could save more than $4 billion a year. Shares in the group have fallen 47% in the last year.
Meanwhile, rival US bank Merrill Lynch has won fresh financial backing totalling $6.6 billion from the Kuwait Investment Authority, the Korean Investment Corporation and other big investors.
Merrill, which has seen its finances stressed by big mortgage investment losses amid an almost two-year long US housing slump, named Japan's Mizuho Corporate Bank as a third new investor among others.
