Citigroup downgraded after monumental losses

Rating agency Standard & Poor's cut the bank's long-term credit rating to AA- from AA, "reflecting the group's severe losses ... stemming from a single business line". The writedowns leave Citigroup with $8 billion of lending and structuring exposure and $29.3 billion of exposure through super-senior tranches of collateralised debt obligations based on subprime asset-backed securities.

The bank also announced its costs are increasing due to the slowdown in the US economy - credit costs rose $4.1 billion in the quarter, due to rising delinquencies on mortgages, credit cards and other loans.

The bank also announced $12.5 billion in new investment, led by $6.88 billion from the Singapore Investment Corporation, with contributions from other private investors and sovereign wealth funds. This should allow the bank to maintain a tier-one capital ratio of 8.2%, Citigroup said.

But S&P warned that the worst might not be over for the bank. New York-based analyst Tanya Azarchs wrote: "Our downgrade also takes into consideration that Citigroup's performance could be rocky in 2008 amid prospects for a continued difficult operating environment for US banks. More writedowns of mortgage-related securities cannot be ruled out".

See also: Citi names Vikram Pandit as CEO
Citigroup names new chief risk officer
S&P: Two years of problems ahead
Change at top as Citi sees writedowns

  • LinkedIn  
  • Save this article
  • Print this page  

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an indvidual account here: