Citigroup's Crittenden Sees More Subprime Writedowns

Citigroup's Crittenden Sees More Subprime Writedowns

June 19 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank, will have ``substantial'' additional writedowns on its holdings of debt linked to the subprime mortgage market, Chief Financial Officer Gary Crittenden said.

The second-quarter markdowns related to subprime mortgages won't be as large as the $6 billion recorded for the first quarter, Crittenden said today on a conference call with investors hosted by Deutsche Bank AG.

``We will continue to have substantial additional marks on our subprime exposure this quarter,'' Crittenden said. ``We may continue to see the magnitude of the marks decline, as the exposures that we have have declined.''

Citigroup has booked more than $40 billion of credit losses and writedowns since the subprime mortgage market collapsed last year. Chief Executive Officer Vikram Pandit, who took over as CEO in December, outlined plans last month for the company to reduce assets by $400 billion over the next two to three years.

The company's subprime holdings include collateralized debt obligations, or CDOs, which are securities packaged from pools of loans and bonds.

Crittenden said on the call that Citigroup may also have to write down the value of assets backed by so-called monoline insurance companies such as Ambac Financial Group Inc., after they were stripped of their AAA credit ratings.

Citigroup last quarter recorded a cost of $1.5 billion to account for the reduced likelihood that the insurers will be able to pay. The company may record a ``similar'' cost in the second quarter, Crittenden said.

Citigroup fell as much as 4.9 percent on the New York Stock Exchange after the comments. The shares dropped 71 cents to $19.69 at 12:27 p.m., after reaching $19.41.

BLOOMBERG