Reprinted from BLOOMBERG

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By Josh Fineman and Bradley Keoun

Oct. 16 (Bloomberg) -- Citigroup Inc., the second-biggest U.S. bank by assets, reported a fourth consecutive quarterly loss after at least $13.2 billion of loan losses and securities writedowns.

The third-quarter net loss was $2.8 billion, or 60 cents a share, compared with earnings of $2.2 billion, or 44 cents, a year earlier, New York-based Citigroup said today in a statement. The loss compared with the $3.8 billion estimate from 7 analysts surveyed by Bloomberg.

Chief Executive Officer Vikram Pandit has failed to return the bank to profitability after $61 billion of losses tied to the slumping housing market. He was thwarted in his effort earlier this month to buy Charlotte, North Carolina-based Wachovia Corp. and gain almost $450 billion of deposits after Wells Fargo & Co. made a higher bid. Citigroup is trying to rebuild as more Americans cut back on spending and fall behind on their bills.

``The capital markets business is extremely challenged,'' said William Fitzpatrick, an equity analyst at Optique Capital Management Inc. in Milwaukee, which oversees about $1.5 billion and recently sold Citigroup shares. ``The outlook for the consumer is extremely dire right now.''

Citigroup rose to $16.90 in trading before the official open on the New York Stock Exchange, from $16.23 at the close yesterday. The company has lost 45 percent of its market value this year, and now ranks fourth by that measure after JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo.

Bank Writedowns

Banks and securities firms have reported more than $640 billion in losses, writedowns and credit provisions since the start of 2007 and raised $611 billion in capital to offset those losses, according to data compiled by Bloomberg. New York-based JPMorgan, the biggest U.S. bank by assets, reported third-quarter net income yesterday of $527 million and Wells Fargo in San Francisco earned $1.64 billion.

Citigroup's writedowns for securities linked to mortgages, commercial real estate and other assets totaled $4.4 billion. The bank's loan losses were $4.9 billion, and the bank increased its reserves for future loan losses by $3.9 billion.

The U.S. government said earlier this week it will spend $250 billion taking stakes in banks, with $25 billion going to Citigroup. As part of the plan, newly issued, senior unsecured debt and non-interest bearing deposits will be guaranteed by the Federal Deposit Insurance Corp.

Fire Sale

With the Wachovia deal, Citigroup would have gotten ``a nice deposit base'' and ``at a fire sale price,'' Fitzpatrick said. ``That's disappointing for Citigroup investors.''

Citigroup's third-quarter revenue dropped 23 percent to $16.7 billion, compared with analysts' average estimate of $20.3 billion, according to Bloomberg's survey.

The U.S. consumer unit, which includes retail banking and loans to individuals and small businesses, had revenue of $7.4 billion, up 2 percent from a year earlier.

Citigroup's Tier 1 capital ratio, a measure regulators use to monitor a bank's ability to withstand loan losses, declined to 8.2 percent at the end of September from 8.7 percent in June. It stood at 7.1 percent at the end of 2007.

In the statement, Pandit called the capital ratio ``strong,'' and said it would be strengthened by the sale of the company's German retail banking operations in the fourth quarter and the investment by the U.S. Treasury.

Managing Risks

``We have also been very focused on aggressively managing our risks during this credit cycle and have been taking steps to add hedges as appropriate,'' Pandit said.

Revenue at Citigroup's trading and investment-banking division plunged 48 percent to $2.39 billion. The wealth management division, which includes the Smith Barney brokerage, declined 10 percent to $3.16 billion.

``Particularly disappointing is that Citi is losing market share in investment banking,'' JPMorgan Chase & Co. analyst Vivek Juneja wrote in an Oct. 13 note. ``Citi has brought several outsiders into the business, but it has not been reflected in the results yet.''

Pandit, 51, put former Morgan Stanley colleague John Havens in charge of trading and investment banking, moved U.S. consumer head Steve Freiberg to oversee a new credit-card division and recruited former Wells Fargo executive Terri Dial to oversee consumer banking in the U.S..

Pandit is taking steps to free up capital by selling assets. Under former CEO Charles O. Prince, Citigroup's balance sheet swelled by $689 billion. Pandit announced plans in May to sell $400 billion of assets.

Citigroup said last month it would cut its dividend in half after slashing the quarterly payment by 41 percent in January to 32 cents a share, the first drop since the early 1990s.

To contact the reporters on this story: Josh Fineman in New York at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it ; Bradley Keoun in New York at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .