Citi Taking $1.3B Hit on B&C-Related CDOs

Citigroup said Monday that it would take a $1.3 billion pretax charge on the value of subprime mortgage securities that are part of current collateralized debt obligations or that are warehoused for inclusion in future CDOs.The subprime-related charges also cover collateralized loan obligations, or CLOs. Additionally, Citi will take a $1.4 billion charge on what it calls "unfunded highly leveraged finance commitments." These writedowns -- and others -- will be taken when Citigroup reports third-quarter results. The banking giant blamed the writedowns on "dislocations" in the mortgage-backed security and credit markets. It estimates that its third-quarter earnings might fall by as much as 60% because of these and other charges. The company can be found online at http://www.citigroup.com.