By Arun Kumar, IANS,
Washington: Citigroup led by Indian American CEO Vikram Pandit Tuesday said it lost $7.58 billion in the fourth quarter of 2009 as the banking giant paid back $20 billion in government bailout money.
Announcing its second consecutive yearly loss, the bank said that it lost about $1.6 billion in 2009 — after a $18.72 billion loss the year before.
The $7.58 billion loss in the fourth quarter was the result of a $10.1 billion accounting charge tied to the repayment of its bailout money, which ended any chance of a profit, it said. Last year, the bank had a fourth quarter loss of $8.29 billion or $1.72 a share.
The New York-based bank set aside $8.18 billion to cover soured loans during the quarter. However, in an encouraging sign, Citigroup’s provision for loan losses declined 10 percent from the previous quarter and 36 percent from the year-ago period when the credit crisis peaked.
In the earnings statement on Tuesday, Pandit cited the “enormous progress” made by the troubled bank in 2009.
“It was our responsibility to get our own house in order,” he said, noting the things that the bank had done, including improving its capital strength, cutting costs by over $13 billion a year and reducing its work force by 100,000 during the quarter.
“As we enter 2010, we are strongly capitalised, significantly more efficient, and are executing on a clear strategy that is focused on clients. With the commitment and dedication of our people, we have created a strong foundation for the future,” Pandit said.
The bank’s chief financial officer, John Gerspach, said in a statement: “The environment continues to be challenging.”
After two years at the helm, Pandit is facing a crucial year, the New York Times said suggesting he must staunch the losses in the bank’s consumer businesses and shift the bank’s strategy.
“He must mollify his top managers and discourage bankers and traders from fleeing. All the while, he must address the demands of a multitude of government overseers,” it said.
Although Citigroup has repaid its bailout money, taxpayers still hold a 34 percent ownership stake, as well as preferred stock investment worth billions of dollars.
Citigroup was the bank hit hardest by the credit crisis and recession, receiving $45 billion in bailout money.