Citigroup shares below $30
NEW YORK (Reuters) - Citigroup Inc (C.N) shares fell below $30 for the first time in more than five years on Monday, amid mounting concern about mortgage losses and possible further job cuts at the largest U.S. bank by assets.
The shares fell for the sixth time in seven sessions, closing down $1.90, or 6 percent, at $29.80 on the New York Stock Exchange.
Monday's drop coincided with a broad decline in shares of financial services companies and contributed to a 237-point decline in the Dow Jones industrial average .DJI.
Citigroup's shares have fallen 46 percent this year, wiping out roughly $129 billion of market value.
"Today, Citigroup's stock level is 100 percent based on fear," said Ganesh Rathnam, an equity analyst at Morningstar Inc in Chicago who has a "buy" rating on the bank. "The market is saying Citigroup needs a big capital infusion that would dilute current shareholders."
The 24-member Philadelphia KBW Bank Index .BKX, which includes Citigroup, fell 4.5 percent on Monday. It is down 25 percent this year.
Citigroup is considering "massive" layoffs that may result in a loss of 17,000 to 45,000 jobs, although no precise number has been set, CNBC television said on Monday.
The bank in April announced 17,000 job cuts, equal to about 5 percent of its work force, as part of a restructuring plan to save $4.58 billion a year by 2009.
"Our business heads are planning ways in which we can be more efficient and cost-effective to position our businesses in line with economic realities," Spokesman Mike Hanretta said.
He added that "any reports on specific numbers (of job cuts) are not factual."
Rathnam estimated that further job cuts could result in $2 billion to $3 billion of annual savings, provided they do not erode revenue.
Citigroup has also said it expects an $8 billion to $11 billion fourth-quarter write-down for losses tied to mortgages, possibly resulting in a quarterly loss.
Some analysts have said larger write-downs may be needed and that Citigroup may cut its dividend, a prospect the bank has rejected. Others have called for the bank to be broken up. Rathnam estimates Citigroup's pieces are worth $56 per share.
Citigroup also has exposure to tens of billions of dollars of structured investment vehicles, or SIVs, whose holdings have become difficult to value as investors shy away from mortgage- related debt they consider too risky.
The bank is working with Bank of America Corp (BAC.N) and JPMorgan Chase & Co (JPM.N) to create a "super-SIV" to support ailing SIVs.
Citigroup faces these challenges as it hunts for a chief executive to replace Charles Prince, who resigned on November 4.
Former U.S. Treasury Secretary Robert Rubin, a top Citigroup executive since 1999, replaced Prince as chairman. Sir Win Bischoff, who led the bank's European operations, was named interim chief executive.
Citigroup shares last traded below $30 on October 14, 2002, roughly coinciding with the bottom of a three-year bear market in U.S. stocks.
(Reporting by Jonathan Stempel; Additional reporting by Dan Wilchins; Editing by Gary Hill and Andre Grenon)
