Citi Still Losing Billions on Mortgages

Steep losses on asset-backed securities and additional loan loss provisions contributed heavily to Citigroup's $8.29 billion fourth quarter loss. Lower mortgage servicing income, as well as rising delinquencies on both first and second mortgages, also weighed on Citi's results, contributing to a 22% decline in consumer banking revenue. Citi's consumer banking division, which includes its mortgage operations, suffered $1.6 billion in fourth quarter credit losses. And the company added $2 billion to its consumer banking loan loss reserves, reflecting an increased volume of loan modifications across product lines. Overall, the North America consumer banking segment lost $2.2 billion in the fourth quarter. Meanwhile, Citi's securities and banking group lost $10.6 billion, reflecting writedowns on derivatives and securities, including a $4.6 billion downward adjustment on subprime mortgage securities. Citi also wrote down Alt-A mortgages, net of hedges, by $1.3 billion. It wrote down commercial real estate positions by nearly $1 billion. Citi also announced it is splitting its business into two operating units, Citicorp and Citi Holdings. Citicorp will be the company's global universal bank in more than 100 countries. Citi Holdings, described as "non-core" businesses, will be made up of brokerage and retail asset management, local consumer finance, and a special asset pool whose management will focus on managing risks and losses. Citi said management will focus on "value enhancing disposition and combination opportunities" for the Citi Holdings businesses as opportunities emerge.