The biggest US bank, Citigroup, has revealed a massive quarterly loss due to writedowns from exposure to subprime mortgages and other risky debt. Citigroup also announced it’s getting a fresh infusion of nearly eight and a half billion euros of capital from investors including the Singapore and Kuwait governments.
Its subprime losses amount to almost 12.5 billion euros,creating a more than 6.5 billion euro loss for the fourth quarter. Turnover for that period fell 70% on the previous year to five billion euros.
Analyst Guillermo Kopp: “Citigroup has not solved the problem yet, and they have made some necessary adjustments, but it seems that the ultimate solution is to sell a piece of the business, or at least some of the assets, which is part of the announcement.”
The bank also said it will lay off another 4,000 people in addition to the 17,000 job cuts announced last April.
Fearing for their jobs, staff of embattled British mortgage bank Northern Rock picketed a crucial emergency meeting where stockholders voted to prevent the company issuing new shares but failed to block any sale of its assets. Northern Rock’s chairman Bryan Sanderson called for “patience and cool heads”
Northern Rock’s public troubles started last September when it sought emergency bailout financing which triggered the first run on a British bank in over 140 years.