DUBAI/NEW YORK (Reuters) - Citigroup Inc <C.N> shares sank to their lowest level in more than nine years on Tuesday after a prominent Middle East investor said the largest U.S. bank needs to raise more capital and an analyst projected a $15 billion mortgage write-down.
By James Cordahi and Jonathan Stempel
DUBAI/NEW YORK (Reuters) - Citigroup Inc <C.N> shares sank to their lowest level in more than nine years on Tuesday after a prominent Middle East investor said the largest U.S. bank needs to raise more capital and an analyst projected a $15 billion mortgage write-down.
Shares of Citigroup, a Dow Jones industrial average <.DJI> component, fell as much as 8.1 percent.
Speaking at a private equity conference, Sameer al-Ansari, the head of Gulf investment agency Dubai International Capital, said Citigroup may need "a lot more money" from investors, after billions of dollars of write-downs tied to subprime mortgages had depleted the bank's capital.
!ADVERTISEMENT!New York-based Citigroup in January slashed its dividend 41 percent, and since November has raised some $30 billion of capital from investors including Abu Dhabi, Kuwait, Singapore and Saudi Prince Alwaleed bin Talal.
"It's going to take more than that to rescue Citi," al-Ansari said. Dubai International Capital manages $13 billion of assets, and has invested in such lenders as HSBC Holdings Plc <HSBA.L> and India's ICICI Bank Ltd <ICBK.BO>.
Separately, Merrill Lynch & Co analyst Guy Moszkowski now expects a first-quarter loss at Citigroup of $1.66 per share.
The analyst said Citigroup may have write off $15 billion of its $37 billion of exposure to subprime mortgages and collateralized debt obligations.
He said it may also face $3 billion of write-downs for commercial real estate and loans to fund leveraged buyouts, as well as "significant increases" in consumer loan losses. Moszkowski previously expected a profit of 55 cents per share.
Meanwhile, CNBC television said the bank might need to eliminate up to 10 percent of its roughly 375,000-person work force, on top of 4,200 job cuts announced in January.
Citigroup suffered a record $9.83 billion fourth-quarter loss tied mainly to mortgage write-downs.
Mounting credit losses led to the November resignation of Charles Prince as Citigroup's chief executive. Vikram Pandit, who replaced Prince, is reviewing Citigroup's businesses in a bid to cut costs, and improve profitability and efficiency.
John Dugan, the U.S. comptroller of the currency, in prepared testimony for a Senate Banking Committee hearing said U.S. banks should prepare for an increase in soured loans tied to credit cards, home equity and commercial real estate.
Edward Najarian, another Merrill Lynch analyst, on Tuesday lowered his earnings forecasts for Bank of America Corp <BAC.N> and Wachovia Corp <WB.N>, the second- and fourth-largest U.S. banks, citing weakening credit market conditions.
The Abu Dhabi Investment Authority, a sovereign wealth fund owned by the world's fifth-largest oil exporter, in December bought a 4.9 percent stake in Citigroup. The next month, the Kuwait Investment Authority said it would invest $3 billion.
Alwaleed, who was Citigroup's largest individual shareholder prior to the Abu Dhabi investment, also increased his stake, as did former Citigroup Chief Executive Sanford "Sandy" Weill.
Sovereign funds have in the last few months also invested in other U.S. financial services companies, including Merrill Lynch <MER.N> and Morgan Stanley <MS.N>.
In afternoon trading, Citigroup shares were down $1.16, or 5 percent, to $21.93. The shares had not traded below $22.47 since November 1998. Through Monday's close, they had fallen 53 percent in the last year.
(Additional reporting by John Poirier in Washington, D.C. and Dan Wilchins in New York; Editing by John Wallace and Tim Dobbyn)
