Citigroup Inc. faces the prospect of $8.9 billion in additional write-downs in the second quarter, and may have to cut its dividend for the second time this year or sell more common stock to raise capital, an analyst at Goldman Sachs & Co. said today.
Citigroup's stock opened today at $17.26, from the 52-week high of $52.97 the stock was trading at in July 2007. The bank's shares are thus trading at about one-third of where they stood at their yearly peak and dropped to their lowest level since October 1998 - the month Citicorp and Travelers Group merged to form Citigroup.
Analyst William Tanona wrote: "We see multiple headwinds for Citigroup including additional write-downs, higher consumer provisions as a result of rapidly deteriorating consumer credit trends, and the potential for additional capital raises, dividend cuts or asset sales." A Citigroup spokesman did not return a call for comment.
The bank already has raised more than $30 billion in the past year, mostly through sales of preferred stock. If it cuts its dividend a second time, Citigroup will join Washington Mutual and National City - distressed regional lenders that both have cut their quarterly payouts to just a penny a share in a push to conserve cash.
Citigroup was the biggest U.S. bank by market capitalization just one year ago, but now trails JPMorgan Chase and Bank of America and is valued at just $95 billion, marking a shareholder loss of approximately $155 billion in one year.