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NEW YORK : US banking giant Citigroup announced on Tuesday a massive quarterly loss of 9.83 billion dollars, dragged down by soured mortgage investments, but also received fresh capital from foreign investors.
Citigroup said it had raised 14.5 billion dollars to shore up its finances, including almost seven billion dollars from a Singapore investment fund.
The financial firm underlined its urgent need for fresh capital as it announced it had written off 18.1 billion dollars largely because of spiking mortgage investment losses.
Citigroup's earnings have been stricken by mounting losses from sub-prime mortgage investments amid one of America's worst housing slumps in decades.
The bank said it had raised additional capital totalling 12.5 billion dollars from the Government of Singapore Investment Corporation Pte Ltd, the Kuwait Investment Authority, Prince Alwaleed bin Talal bin Abdulaziz of Saudi Arabia, former Citigroup chief executive Sanford Weill and other investors.
America's second biggest financial firm by market worth after Bank of America said it was also issuing two billion dollars in new securities which boosts the total sum of new capital raised to 14.5 billion dollars.
Investors punished Citigroup's stock price despite its pledges of fresh support. Citigroup's shares dived 6.1 percent to 27.27 dollars in late morning trading.
The Standard & Poor's ratings agency announced it was downgrading its credit ratings on Citigroup a notch due to the hefty losses and murky outlook.
Separately, the CtW Investment Group, which has a stake in Citigroup, criticised the bank's board of directors for a "massive" failure.
The quarterly loss compared with a profit of 5.13 billion dollars in the fourth quarter of 2006.
The bank reported a net loss of 1.99 dollars per share for the quarter against a profitable 1.03 dollars in the prior year. Net profit for 2007 plunged 83 percent from 2006 to 3.62 billion dollars.
The ailing banking colossus desperately needs funds because its losses tied to mortgage investments have ballooned in recent months amid a national housing downturn which shows no signs of easing.
Citigroup wrote off 17.4 billion dollars during the quarter in investments mostly tied to sub-prime mortgages.
Sub-prime home loans given to Americans with poor credit proliferated during a years-long housing boom that ran out of steam almost two years ago.
Citigroup's new chief executive, Vikram Pandit, said the bank's financial picture was "clearly unacceptable."
"Our poor performance was driven primarily by two factors - significant write-downs and losses on our sub-prime direct exposures in fixed-income markets," Pandit said.
Pandit took over Citigroup on December 11 after Charles Prince resigned amid increased losses. He said executives were vying to "strengthen our capital base."
Citigroup said it was also slashing its quarterly dividend by 40 percent to preserve cash.
The investments by the Singapore and Kuwaiti funds came after Citigroup raised 7.5 billion dollars in capital in late November from the state-run Abu Dhabi Investment Authority, which is now one of the bank's biggest shareholders.
Rival banks are also reeling from the housing meltdown. Merrill Lynch announced on Tuesday that it had raised 6.6 billion dollars in fresh capital from foreign and US investors including the Kuwait Investment Authority and the Korean Investment Corporation.
Citigroup's quarterly revenues declined a hefty 70 percent to 7.2 billion as the bank continued writing off mortgage investments.
In a sign that US consumers could be feeling the housing crunch, Citigroup also announced net credit losses of 1.56 billion dollars mainly related to credit-card operations. - AFP/ir/de
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