Citigroup Sells $3 Billion of Stock to Boost Capital
April 29 (Bloomberg) -- Citigroup Inc., the U.S. bank hit with writedowns on subprime mortgages and bonds, is selling $3 billion of stock two weeks after reporting its second straight quarterly loss.
The shares are being sold in a public offering, New York- based Citigroup said today in a statement. Citigroup already has raised more than $30 billion of capital since December. After posting a first-quarter loss of $5.1 billion on April 18, Chief Financial OfficerGary Crittenden said he couldn't rule out additional rounds of capital-raising.
``This was extremely disappointing,'' William Fitzpatrick, an equity analyst at Optique Capital Management in Racine, Wisconsin, said in a Bloomberg Television interview. ``I would say this is probably it, but I have said that before.''
The new equity, when combined with $6 billion of recently issued preferred stock, will raise Citigroup's so-called Tier 1 capital ratio to about 8.5 percent, the New York-based bank said in a statement today. The ratio, used to gauge a bank's ability to withstand loan losses, was 7.7 percent at the end of March. Regulators consider banks with a Tier 1 ratio of 6 percent ``well capitalized.''
Citigroup fell about 3.8 percent to $25.32 in extended trading after the stock sale was announced this afternoon. It rose 49 cents to $26.32 earlier today in New York Stock Exchange trading.
``We are issuing common equity at this time as we continue to optimize our capital structure,'' Crittenden said in today's statement.
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