Citigroup Inc. lost almost US$10 billion in last year's final three months, the largest quarterly deficit in its 196-year history, and slashed its dividend and 4,200 jobs as it recorded a mammoth write-down for bad bets on the mortgage industry.

The nation's largest bank wrote down the value of its portfolio by US$18.1 billion and said it was setting aside US$4 billion to cover U.S. consumer credit defaults.

It signalled further problems in its consumer businesses as deflated home prices, high energy and food costs, and rising unemployment weigh on people's ability to keep up with their payments.

The reduction of 4,200 jobs in the fourth quarter is in addition to 17,000 layoffs announced in the spring, and Chief Financial Officer Gary Crittenden said during a conference call that more job cuts would be on the way.

'Unacceptable'fourth-quarter

Chief Executive Vikram Pandit, who replaced Charles Prince in December, said the fourth-quarter results were "unacceptable", and that he was "not yet finished" in his review of whether any of the global bank's core operations need to be cut or sold.

To bolster its capital, the bank also said Tuesday it has lined up US$12.5 billion in new investments from sovereign wealth funds and existing shareholders.

That includes $6.88 billion from the Government of Singapore Investment Corp. for a 4.0 per cent stake. Other investors were Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of Investment, shareholder Prince Alwaleed bin Talal of Saudi Arabia and former Chief Executive Sanford Weill and his family foundation.

The US$12.5 billion in fresh equity adds to the US$7.5 billion that Citi got in November from the Abu Dhabi Investment Authority in exchange for a 4.9 per cent stake in the company.

Citigroup's shares, which were trading around $55 a year ago, fell $1.98, or 6.8 per cent, to $27.08 in morning dealings on Tuesday.

The loss for the quarter totalled US$9.83 billion, or US$1.99 per share, compared with earnings of US$5.13 billion, or US$1.03 per share, during the same quarter a year earlier.

Revenues fell to US$7.22 billion, down 70 per cent from US$23.83 billion in the final quarter of 2006.

Citigroup said the 41 per cent cut in its quarterly dividend to 32 cents a share from 54 cents — along with the Asian investments and a stock offering of about $2 billion — will help boost its Tier 1 capital ratio, a measure of its financial strength. But it will also dilute the value of shareholders' stock.

Financial companies have been the highest dividend-paying sector in the stock market, but many Ñ including Washington Mutual Inc, National City Corp and the government-sponsored lenders Freddie Mac and Fannie Mae — have pared those payouts in recent months.

Citigroup's decision to cut its dividend and seek new cash from outside investors was widely anticipated on Wall Street after months of scrutiny over the bank's deteriorating operations.

The biggest was Citigroup's bad bets on mortgage-backed bond instruments called collateralized debt obligations.

It also was forced to bring US$49 billion in haemorrhaging funds known as structured investment vehicles onto its books.

Over the past several weeks, Asian funds have been buying up the battered stocks of struggling U.S. banks. Early Tuesday, Merrill Lynch said it will receive a total of US$6.6 billion from the Korean Investment Corp, Kuwait Investment Authority and Japan's Mizuho Corporate Bank, in addition to the $4.4 billion it already got from Singapore's state-run Temasek Holdings.

Pandit said Citigroup would continue to sell "non-core" assets.

The bank has already sold shares in Redecard, a card business in Latin America, and an ownership interest in a unit of the Japanese brokerage Nikko Cordial it bought last year.

Citigroup's US$18.1 billion writedown was significantly wider than the US$6 billion writedown it took in the third quarter last year, and bigger than the US$8 billion to US$11 billion it guessed in October that it would take for the fourth quarter.

Citigroup said as of December 31, it had a total of US$37.3 billion in direct subprime mortgage exposure, down from US$54.6 billion three months prior.

It was not all bad news for Citigroup, as the bank recorded record results in its international consumer, transaction services and wealth management segments.

But its strengths were not nearly big enough to offset its weaknesses.

Citi's full-year net income for 2007 fell 83 per cent to US$3.62 billion, or 72 cents a share, versus a year ago.

AP