Hit by continuing credit problems and mortgage-related losses, Citigroup and Merrill Lynch saw their profits fall sharply in the third quarter of 2008.Citigroup posted a third quarter loss of $2.8 billion, compared with a profit of $2.2 billion in the same time period last year. These results included $4.4 billion in write-downs in the securities and banking division, $4.9 billion in net credit losses, and a $3.9 billion charge to boost its loan loss reserves.
The bank has laid off 11,000 people in the quarter and 23,000 since the beginning of the year.
Chief executive Vikram Pandit blamed "a difficult environment [and] continued write-downs on our legacy assets" for the losses, but added: "we are making excellent progress on the parts of our business we control, including expense reduction, headcount, and balance sheet and capital management.”
Merrill Lynch announced a third-quarter net loss of $5.2 billion, compared with a net loss of $2.2 billion in the same span last year. The bank saw $3.8 billion in write-downs resulting from losses in the real estate sector, government-sponsored entities and exposure to failed investment banks; the bank did not provide details on these exposures. The bank also experienced write-downs of $5.7 billion resulting from the sale of super-senior ABS CDOs and the closeout of hedges with monoline guarantor counterparties.
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