Citigroup dethroned in dismal underwriting quarter

By Jonathan Stempel

NEW YORK (Reuters) - Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz) was dethroned as the world's largest underwriter of stocks and bonds for the first time in more than six years, as the global credit crunch hit Wall Street hard.

JPMorgan Chase & Co (JPM.N: Quote, Profile, Research, Stock Buzz) was the top underwriter in the first quarter, the first time in 25 quarters that Citigroup did not rank first, Thomson Financial said on Monday.

It was a dismal quarter for the industry, as underwriting volume plummeted 45 percent, including declines of more than 75 percent in issuance of U.S. asset-backed securities, mortgage debt and junk bonds. Reported fees fell 7 percent.

While Visa Inc's (V.N: Quote, Profile, Research, Stock Buzz) initial public offering for a U.S. record $19.7 billion was a bright spot, many sectors showed steep declines, especially in fixed-income areas, where many investors have curtailed or stopped their buying.

"There was a total contraction in credit," said Richard Peterson, director of capital markets at Thomson. "We don't know if there are more hidden time-bombs. The market is sensing there could be more."

According to Thomson, underwriting volume fell to $1.27 trillion from $2.3 trillion a year earlier. JPMorgan arranged $129.4 billion of offerings, winning a 10.2 percent share. Citigroup followed with $94.7 billion of offerings and a 7.5 percent share. Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research, Stock Buzz) was third, with $91.8 billion of offerings and a 7.2 percent share.

Reported fees fell to $3.38 billion from $3.65 billion. Citigroup led in that area with a 15.6 percent share, followed by Bank of America Corp's (BAC.N: Quote, Profile, Research, Stock Buzz) 8.9 percent and Goldman Sachs Group Inc's (GS.N: Quote, Profile, Research, Stock Buzz) 7.8 percent. JPMorgan was fourth.

Bankers covet rankings in Thomson's underwriting "league tables" for marketing purposes and bragging rights. Thomson's parent, Thomson Corp TOC.TO, is expected in April to complete its acquisition of Reuters Group Plc RTR.L.