HOW BAD ARE THINGS AT CITI?

Citigroup lost $9.83 billion in Q4, in part due to $18 billion in writedowns. Now, after raising over $14.5 billion in new funding from Saudi Prince Alaweed, the Kuwait Investment Authority, and the Abu Dhabi Investment Authority, it seems Citi needs more capital or it is in big trouble.

From MarketWatch:

Sameer Al Ansari, Chief Executive of Dubai International Capital told delegates at a private equity conference that it will take more than the combined efforts of the Abu Dhabi Investment Authority, the Kuwait Investment Authority and Saudi investor Prince Alwaleed bin Talal to save the bank.

"It's going to take more than that to rescue Citi," Ansari said. He added that more write downs are expected and that Gulf investors would be required to bolster Citi.

Al Ansari said "it would take a lot more money to rescue Citigroup." A spokesperson for Citi was unable to comment immediately when called Tuesday.

CITIGROUP SELLS 4.9% STAKE TO ABU DHABI FUND

From The New York Times:

Citigroup announced last night that it was selling a $7.5 billion stake to a Middle Eastern sovereign fund in the latest bid to shore up its balance sheet.

The fund, the Abu Dhabi Investment Authority, has agreed to buy a 4.9 percent equity stake in a complex transaction that has been approved by federal regulators. It will have no role in the management or governance of Citigroup, nor any presence on Citigroup’s board.

Abu Dhabi’s 4.9 percent stake will make it Citigroup’s single largest shareholder, overtaking Prince Walid bin Talal of Saudi Arabia. He has owned close to a 5 percent stake since the early 1990s, when he made a similar investment to bail out the company. Together, their holdings will mean that nearly 10 percent of the Citigroup will be owned by Middle Eastern investors.

“This investment reflects our confidence in Citi’s potential to build shareholder value,” said A.D.I.A.’s managing director, Sheikh Ahmed bin Zayed al-Nahyan.

The investment from Abu Dhabi underscores Citigroup’s precarious capital position, and also highlights the growing petrodollar wealth of Mideast countries, which are buying up assets and taking stakes in numerous American companies.

CITIGROUP PUSHES PRINCE OFF OF CLIFF, WRITES DOWN ANOTHER $8-$11 BILLION

From USA Today:

With firm determination, Citigroup CEO Charles Prince declared earlier this year that 2007 was going to be the "year of no excuses."

Now he's run out of them.

Amid growing losses from subprime mortgages at the giant financial services firm, Prince, 57, retired under pressure on Sunday. He said it was "the only honorable course for me to take." Former Treasury secretary Robert Rubin, a board member and chairman of the company's executive committee, will serve as chairman of the board. Sir Win Bischoff, chairman of Citi Europe, will serve as acting CEO, the company said.

Citigroup also is lowering the value of some of its securities tied to subprime mortgages. It estimates the value of those securities, at fair market value today, would be $8 billion to $11 billion less than it expected just Sept. 30. That write-down would be in addition to a $6.5 billion write-down it has already taken. The company also said a special unit has been set up to handle the subprime mortgage problems. Citi said it has no plans to reduce its dividend.

CITIGROUP CUTS 17,000 JOBS, SAVES $2.1 BILLION IN 2007

From WSJ.com:

Citigroup Inc., in what's considered its first major overhaul since its formation a decade ago, announced it will save $2.1 billion in 2007 by eliminating 17,000 positions.

The New York financial services giant's long-awaited restructuring will eliminate certain layers of management and reduce its corporate center. Back-office, middle-office and corporate functions will be consolidated, and more than 9,500 jobs will be moved to lower-cost locations, domestically and internationally.

Citigroup sees savings of $3.7 billion in 2008 and $4.6 billion in 2009. It will take a charge of $871 million in the first quarter and pretax charges of $200 million over the rest of 2007. The company will release its first-quarter results Monday.

Over the past year, Citigroup's stock has underperformed hometown rival J.P. Morgan and Bank of America Corp. Last summer, Citigroup's largest individual shareholder, Prince Alwaleed bin Talal, demanded that the company take "draconian" steps to reduce expenses.