Citigroup shares below $US1

ONE dollar could buy a pack of chewing gum, a roll of toilet paper or a few lollies. Now for the first time, it could also buy a share of Citigroup, once the world's largest bank by market value.

The price of a Citigroup share fell below $US1 ($1.57) on Wall Street overnight in a sign that investors are losing confidence that the lender, which operates in more than 100 countries, can be restored to health after $US37.5 billion of losses in the 15 months ended December 31.

Shares fell as low as 97 cents, leaving the bank with a market value below $US6 billion - down from more than $US277 billion in late 2006. The decline came even though Citigroup has gotten $US45 billion of taxpayer-funded capital since October, and despite federal efforts to stimulate the economy and lending.

Citigroup was not immediately available for comment.

"It's nothing but bad news," said James Barth, a finance professor at Auburn University and a senior fellow at the Milken Institute. "One might have thought the stimulus from Washington would have had some positive impact, but nothing is turning around investor confidence. The concern is that there is a point at which the Government looks at Citigroup and says, enough is enough."

Citigroup remains part of the Dow Jones industrial average .DJI of 30 blue-chip companies. Naomi Kim, a spokeswoman for Dow Jones Indexes, which maintains that index, said: "We are watching the situation closely." Other banks in the index are Bank of America Corp and JPMorgan Chase & Co.

Vikram Pandit, Citigroup's chief executive, is trying to sell poorly-performing businesses and shed risky debt to cap losses, bolster capital and avoid the potential nationalization of New York-based Citigroup that many investors fear.

The Obama administration and regulators including Federal Reserve Chairman Ben Bernanke have said they do not want the government to take full control of the nation's banks.

In early afternoon trading, Citigroup shares had recovered some losses, and were down 8 cents at $US1.05. The New York Stock Exchange has suspended until June 30 a rule requiring delisting of companies whose share price remains persistently below $US1. 


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