Magazine article American Banker

Citigroup Stock Declines, Has Lots of Company

Magazine article American Banker

Citigroup Stock Declines, Has Lots of Company

Article excerpt

Shares of Citigroup Inc. continued to fall Monday and dragged other financial stocks down with them as the company disclosed the extent of its market exposure.

Citi's shares were down as much as 7% during the day and closed down 4.85% after it revealed it will write off $8 billion to $11 billion this quarter to reflect the plummeting value of securities tied to subprime mortgages. The company also said it had revised its third-quarter earnings downward.

The $2.4 trillion-asset Citi disclosed its financial situation as Charles O. Prince stepped down as chief executive, with Mr. Prince calling it "the only honorable course for me to take" in light of the charges.

On Friday Citi's shares had shed 7% as rumors swirled that more writedowns were coming and that Mr. Prince was poised to resign.

Mr. Prince is the second high-profile executive to fall on his sword after this summer's credit market turmoil. In late October, Merrill Lynch & Co. Inc. said it took writedowns of $7.9 billion in the third quarter, up from a previous estimate of $4.5 billion, citing exposure to bad subprime loans. The announcement led to the ouster of chief executive E. Stanley O'Neal last week.

"When you see a huge money center like that taking those kinds of writedowns, investors worry. They want to know, What else is coming? What other trouble is on the books at other companies?" Tim Curran, a trader at Regions Financial Corp.'s Morgan Keegan & Co. Inc., said of Citi's disclosure Monday. "People are worried, and they are starting to expect the worst."

Citi's chief financial officer, Gary Crittenden, told investors Monday that it is still too early to predict how the company will fare in the fourth quarter.

Shares of several other large banking companies lost ground Monday amid concerns they too might take charges. …

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