NEW YORK — Pressure intensified on Citigroup to sell part or all of itself as its stock fell below $4 a share Friday and fears escalated about future loan losses.
Chief executive Vikram Pandit told managers earlier in the day that he opposes breaking up the company, but the bank’s board of directors was meeting Friday to discuss whether to do exactly that, The Wall Street Journal reported.
What investors are worried about is that all the risky debt sitting on Citigroup’s balance sheet will eventually turn into losses as the economy worsens and the markets stay turbulent — losses that could be nearly impossible to reverse.
Investors were also fearful that the government might orchestrate a takeover of Citigroup over the weekend that could wipe out common shareholders, said Paul Miller, a Friedman Billings Ramsey banking analyst.
The government was instrumental in JPMorgan Chase & Co.’s buyout of Bear Stearns and Washington Mutual Inc., deals that left shareholders with little or no payouts.
The Treasury Department, the Federal Reserve and other banking regulators are monitoring the situation, government officials said.
They spoke on condition of anonymity because of the sensitive nature of the matter.
Just a couple of months ago, Citigroup was the largest bank in the world by assets, stretching into everything from credit cards to consumer banking to high-stakes corporate dealmaking.
But it has failed to turn a profit during the past four quarters.
