The bank is widely perceived as needing more capital, after it recorded about $6.8 billion of writedowns in the third quarter and said in November it may face another $11 billion of write-downs. The bank is expected to report a large fourth-quarter loss when it releases results on Jan 15.
NEW YORK (Reuters) - Shares of Citigroup Inc <C.N> rose 3.4 percent on Friday on hopes the largest bank in the United States was close to securing new outside capital and preparing other moves to shore up its strained balance sheet.
The bank is widely perceived as needing more capital, after it recorded about $6.8 billion of writedowns in the third quarter and said in November it may face another $11 billion of write-downs. The bank is expected to report a large fourth-quarter loss when it releases results on Jan 15.
"We believe they are close to securing more capital, because they're going to need something to say on Tuesday," said Marshall Front, chairman of Chicago's Front Barnett Associates.
Front Barnett owns Citi shares, and Front owns the stock personally as well.
!ADVERTISEMENT!A report in the Wall Street Journal on Thursday said Citigroup could raise as much as $10 billion, likely from foreign governments.
Any new capital would follow a $7.5 billion deal Citi announced in November to sell up to 4.9 percent of itself to the Gulf Arab emirate of Abu Dhabi.
The bank may also cut its dividend in half, the Wall Street Journal said, in a move that could save more than $5 billion a year.
Citigroup is also expected to announce thousands of layoffs, after saying in November it was examining ways to be more cost effective, analysts said.
"They're going to have to reveal belt-tightening, to maintain investor confidence," Front said.
Citi shares rose 95 cents on Friday to $29.06 on the New York Stock Exchange.
(Reporting by Dan Wilchins; Editing by Derek Caney)
