INSTANT VIEW: Citigroup and Bank of America report results

NEW YORK (Reuters) - Citigroup Inc and Bank of America Corp released their fourth-quarter results on Friday morning that showed both the deepening problems in the U.S. financial sector and the steps that both banks are taking to survive.

Citigroup unveiled a broad restructuring designed to shed weaker businesses and troubled assets, and also reported an $8.29 billion fourth-quarter loss, its fifth straight quarterly loss.

Bank of America reported posted its first quarterly loss in 17 years and slashed its dividend, just hours after winning a multibillion-dollar lifeline from the federal government to help it absorb Merrill Lynch & Co, which lost a record $15.31 billion in the quarter.

The net loss at Bank of America alone was $1.79 billion, or 48 cents per share, and compared with a profit of $268 million, or 5 cents, a year earlier.

The following are comments from market participants on the banks' results:

COMMENTS:

MICHAEL HOLLAND, FOUNDER OF HOLLAND & CO, OVERSEES MORE THAN $4 BILLION, NEW YORK -- ON CITIGROUP

"On the one hand, this is the fifth consecutive quarter of losses. It's just a continuing bad dream for the management and shareholders of Citi.

"On the other hand, the history of good bank/bad bank is surprisingly positive. It worked a couple of decades ago, so I think it's one of the first steps toward some positive news and the end of this nightmare.

"It's the first major step toward the dismantling of the empire.

"We have for the first time in a long time some reason to think positively."

PETER DIXON, UK ECONOMIST AT COMMERZBANK, LONDON -- ON CITI

"It's quite clear that the numbers are dire. It's interesting that Citigroup is clearly inclining to split up. It's an indication that the era of big financials is at an end for now. Banks have to divest themselves of their noncore businesses if they are going to survive. It's going to be a very difficult period.

"The problem is of course if you start to get rid of what's perceived to be noncore assets who is going to buy them?

"There is going to be massive cost cutting. That's clear. The outlook for the whole banking sector is going to be grim because not only banks around the world have to cope with the toxic assets on their balance sheets, they also have to content with a deterioration of the economic cycle which is going to impact them."

MARTIN SLANEY, HEAD OF DERIVATIVES AT GFT, LONDON

"The negative earnings-per-share numbers for both Citigroup and Bank of America, and a horrific loss for Citigroup in excess of $8 billion are worse than the market had expected, but this disappointment is being overshadowed by the colossal bail-out deal for Bank of America announced overnight.

"The predilection being shown by the U.S. government to continue to put up the cash and guarantees required to support the too-big-to-fail players is being lapped up by the markets.

"Despite the worse-than-expected numbers, U.S. stock markets are still expected to open up around 1 percent, focusing on the bigger-picture ramifications of the funding lifeline."

MATT MCCORMICK, PORTFOLIO MANAGER, BAHL & GAYNOR INVESTMENT COUNSEL, CINCINNATI, OHIO -- ON CITIGROUP

"I think people knew it was going to be bad, but I'm surprised it's this bad. (Citigroup CEO Vikram) Pandit has his work cut out for him.

"It seems that every release I see from them is about the future, and how this newest plan is the best thing for them. I don't want them to take on more water, but they are facing some serious, serious challenges. Even if they divide into two divisions, the results all fall to the same bottom line.

"I'm not sure this is their way out -- they're getting hit on all sides, and they're struggling. This is an extremely difficult road, regardless of how many parts they split into."

CASSANDRA TOROIAN, CHIEF INVESTMENT OFFICER, BELL ROCK CAPITAL, PAOLI, PENNSYLVANIA

ON BANK OF AMERICA:

"None of it's a surprise at this point."

"They were probably one of the best banks out there balance sheet-wise until they did the Merrill deal, I think they had a handle on things pretty well.

"I think it's really unfortunate that they had to cut the dividend."

ON CITIGROUP:

"Again, it's about what we would have expected: ugly all around.

"I am a little bit surprised at the size of what they have marked down. What have they been doing this last year?

"(The reorganization) comes as too little, too late. I am astonished it took them 12 months to do this."

ANDREW BELL, HEAD OF RESEARCH, RENSBURG SHEPPARDS, LONDON

"I am not surprised that (Citigroup's net loss) is a big number in an environment in which you want to try and get all of the bad news out as quickly as possible.

"The authorities obviously want banks to have the confidence to start lending again and they won't do that until they feel that they are protected against further losses on the legacy portfolio of asset-backed securities.

"The longer they hold back from lending, the greater the depths of the recession would be."

MATT MCCALL, PRESIDENT OF PENN FINANCIAL GROUP IN RIDGEWOOD, NEW JERSEY

"Everybody out there believes that the government will not let these banks fail, and that's what giving the market a bounce today.

"But, I still don't know how we're going to pay for all of this. It's either our taxes are going to get raised very high, or this is going to crush the U.S. dollar, which leads me to like commodities right here."

(Reporting by Juan Lagorio, Elinor Comlay, Ellis Mnyandu and Dan Wilchins in New York; and Dominic Lau and Atul Prakash in London)