Citigroup writes down $18 billion and cuts 4,200 jobs

by Gill Montia

Story link: Citigroup writes down $18 billion and cuts 4,200 jobs

Citigroup, the world’s largest bank, yesterday reported that it has written down $18 billion (£9.1 billion) in the fourth-quarter of 2007.

The bank, which has a high level of exposure to sub-prime mortgage debt, recorded a loss of $9.83 billion for the quarter and has cut its dividend by 41%.

Further writedowns are expected, with analysts predicting an amount of between $2 billion and $3 billion.

As part of a recovery plan, Citigroup will be cutting 4,200 jobs from its global workforce of around 300,000 and further job losses are expected.

The group has also secured a cash injection of $13.5 billion. Around $6.88 billion has come from an investment fund controlled by the Government of Singapore and the remainder from the Kuwait Investment Authority; Prince Alwaleed bin Talal; Sanford Weill (a former Citigroup chief executive); Capital Research Global Investors; Capital World Investors; and the New Jersey Division of Investment.

The fund raising has taken the form of bonds that pay an annual rate of interest of 7%.

The holder can choose to convert the bonds into Citigroup shares at a price set at the outset of the transaction.