Citigroup is expected to announce a series of drastic steps today, including the elimination at least 4,000 additional jobs, a steep cut in its stock dividend, and another big investment by foreign investors, in a bid to bolster its finances in the face of deepening losses.
Beginning what is expected to be a grim week for financial company earnings, Citigroup is likely to announce a write-down of $18 billion to $20 billion, the biggest yet by a major bank or Wall Street firm, according to a person briefed on the situation. Such a big loss, the result of soured mortgage-related investments, could wipe out the company's profit for all of 2007 and plunge Citigroup into the red.
As part of a plan to shore up Citigroup, Vikram S. Pandit, the company's chief executive, is expected to announce the start of a new round of job cuts that many analysts say will accelerate over the coming months. The first reductions, of about 4,000 positions, will come on top of 17,000 job cuts announced last spring.
At the same time, Citigroup is expected to turn to wealthy foreign governments again and announce today the sale of a $12.5 billion stake to the Kuwait Investment Authority and several other big investors, including Prince Alwaleed bin Talal of Saudi Arabia, people briefed on the situation said. In November, the company sold a $7.5 billion stake to a Middle Eastern fund, the Abu Dhabi Investment Authority.
The latest moves highlight the extent to which Citigroup's capital position has weakened and raise questions about the company's diversified business model.
"The board has been behind the ball, no doubt about it," said Meredith A. Whitney, a banking analyst at CIBC World Markets, who has called on Citigroup to cut its dividend. "This is a company with serious capital shortfalls. The balance sheet should be the first thing that should be looked at for a bank, not the last."
Shares of Citigroup have dropped more than 47 percent over the last year. They fell 50 cents yesterday to close at $29.06
