I saw TV yesterday and shock knowing that Citigroup loses $9bn and plans to cut 52,000 jobs. Citigroup, once the world's biggest bank, saw more than $9bn (£6bn) wiped off its value yesterday as its shares were locked in a downward spiral on Wall Street, amid fears the bank will lose billions more in the months ahead as bad debts pile up.
As the market closed, Citigroup shares were down by more than 22% at $6.45 (£4.30), their lowest level since 1995. From global top spot, the bank is now ranked fifth in the US by market value, behind the regional lender US Bancorp.
Citigroup's market capitalisation plunged to $35.5bn (£23.7bn) by the time the New York Stock Exchange closed. At the start of the day it was worth more than $44bn (£29.6bn), while a little more than a year ago Citi had a market value of $250bn (£167bn) and dominated US banking.
The sell-off in Citi shares increases the pressure on Vikram Pandit, the embattled chief executive who has failed to arrest its rapid decline. Since Pandit took over the helm of Citi last December, the company has posted losses of more than $20bn and the banking group has lost more than 73% of its market value.
Pandit revealed plans to cut 52,000 jobs from operations worldwide, including thousands in the City of London. Far from pleasing the market, the move served only to further depress the share price.
To make matters worse, several Wall Street analysts yesterday published bleak profits forecasts for Citigroup.
David Trone, banking analyst at Fox-Pitt Kelton, said he expects Citigroup to take net write-downs of $3bn during the fourth quarter. Trone also widened his quarterly loss estimate for Citigroup to 79 cents a share, from 8 cents.
Citigroup was the biggest loser among US banks yesterday on another nightmarish trading session on Wall Street.
Citi was not alone, as billions of dollars were slashed from the market values of all of America's biggest banks. Bank of America shares were down more than 14% at $13, and JP Morgan Chase shares fell more than 11% to $28.47.
The US labour department's consumer price index plummeted 1%, the biggest drop since records began in 1947. Analysts said earlier concern about inflation risks might soon be replaced by worries about deflation.
