Citi to split into two after $8.29 billion fourth-quarter loss

16 January 2009

US banking major Citigroup has announced plans to split up operations into two businesses following a fourth-quarter net loss of $8.29 billion, its fifth straight quarterly loss.
 
For the full year 2008, Citigroup reported a net loss of $18.72 billion, or $3.88 per share. Net loss from continuing operations rose to $12.14 billion. Results also include $6.1 billion in net credit losses and a $6.0 billion net loan loss reserve build.

Citigroup is reorganising its business into Citicorp, which will focus on traditional banking around the world and Citi Holdings, which will hold the company's riskier assets, CEO Vikram Pandit said while announcing the results.

Pandit said Citi's fourth quarter revenues were $5.6 billion, down 13 per cent. Revenues across all businesses reflect the impact of a difficult economic environment and weak capital markets.

Global Cards GAAP revenues declined 27 per cent, mainly due to lower securitisation results in North America.

Average managed loans declined 2 per cent, due to lower purchase sales in North America and the impact of foreign exchange. North America managed revenues increased 4 per cent.
 
Consumer banking revenues declined 22 per cent, driven by a 47 per cent decline in investment sales, lower mortgage servicing revenue, the impact of foreign exchange, lower volumes and spread compression.

"Today, we announced that we would separate the company, for management purposes, into two separate businesses - Citicorp and Citi Holdings. We are setting out a clear roadmap to restore profitability and enable us to focus on maximizing the value of Citi and strengthening TCE,'' said Pandit.