Citi Cuts Dividend to One Cent, As Expected

Mary Altaffer / AP

Citigroup is declaring a quarterly dividend of 1 cent per share on the company's common stock, all that is allowed under the federal government's $20 billion bailout of the financial giant in November.

As a condition of the rescue, Citigroup cannot pay quarterly dividends to shareholders of more than 1 cent a share for three years unless it obtains consent from the three federal agencies—the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp.

The bank's last dividend payment in November was 16 cents per share, which was half of its 32-cent payout in the previous quarter. The 1-cent dividend is payable on Feb. 27th to stockholders of record on Feb. 2nd. Citi also declared dividends on its preferred stock.

Citigroup, scrambling to survive losses triggered by the credit crunch, unveiled plans last week to split in two and shed troubled assets, and reported a quarterly loss of $8.29 billion.

The banking giant also said it expected more departures from its embattled board, which is losing former Treasury Secretary Robert Rubin as a director later this year.

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Citigroup, whose shares have plunged 87 percent since the beginning of 2008, said it recorded $28.3 billion of writedowns and credit losses in the 2008 fourth quarter. Losses over the past 15 months total more than $92 billion.

The bank's fourth-quarter loss was $8.29 billion, or $1.72 per share, compared with a year-earlier loss of $9.8 billion, or $1.99 a share. The most recent results included $3.9 billion of gains from the sale of it German retail bank.

Citigroup, once the champion of the "financial supermarket" model, is splitting into two operating units in what is known as a "good bank/bad bank" strategy. Critics of the bank, who argue it had become too big and complex to manage, have demanded a break-up for some time.

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