Shares of Citigroup Inc. dropped to the lowest level in nine years Tuesday after two analysts predicted a first-quarter loss and a Middle Eastern investment fund said the bank needs more capital.
The shares fell 99 cents, or 4.3 percent, to $22.10, on the New York Stock Exchange. That’s the lowest price since 1998. They have tumbled 24 percent this year, the second-worst performance among the 30 members of the Dow Jones industrial average, after Intel Corp. Citigroup was the gauge’s worst performer last year, when it fell 45 percent.
The nation’s largest bank could have $15 billion of write-downs this quarter tied to subprime mortgages and collateralized debt obligations, leaving it with a net loss of $1.66 a share, Merrill Lynch & Co. analyst Guy Moszkowski said in a note. Goldman Sachs Group Inc. analyst William Tanona said the bank would lose $1 a share.
“We remain concerned” about the potential for loan losses, Moszkowski said. “The company still has quite a way to go” before its $37 billion of holdings of subprime loans and related bonds are written down to the current market value.
Bank spokesman Michael Hanretta declined to comment on the analysts’ reports. Asked whether the bank needs to raise more capital, Hanretta referred to comments by Chief Financial Officer Gary Crittenden on a Jan. 15 conference call with analysts. Crittenden said then that the bank had raised enough from outside investors to address any shortfall that resulted from additional write-downs.
“Not only do they need to raise more money, but they should’ve suspended their dividend six months ago,” said Christopher Whalen, managing director of consulting firm Institutional Risk Analytics.
“They’re trying to do this in bite-size pieces,” said Whalen. “But everyone’s still waiting for the other shoe to drop.”
Citigroup raised $7.5 billion in November from Abu Dhabi after record mortgage losses wiped out almost half the company’s market value and said in January it was getting another $14.5 billion from investors, including the governments of Singapore and Kuwait.
“It will take a lot more than that to rescue Citi and other financial institutions,” Sameer al-Ansari, chief executive of Dubai International LLC, said Tuesday at an investment conference.
