Citibank To Close 10 Branches In Northern Connecticut | Parent company hurt by subprime losses
Citigroup has confirmed that it will be closing 10 Citibank branches in northern Connecticut, and it has cancelled plans to open a new branch in the region.
The company declined to identify the locations, saying it had not yet notified customers. It plans to continue operating several branches in southern Connecticut.
“In order to provide the best service to the market, we would need to greatly expand our branch coverage,” Citigroup said in a written statement. “We believe that divesting these branches and devoting our resources to other opportunities and locations is the best course for our company, our employees and our shareholders at this time.
“Citibank is committed to maintaining and enhancing its franchise in southern Connecticut, where we have had a presence for many years.”
The bank holds more than $1 billion of deposits in the state.
Subprime Woes
Citigroup has suffered severe losses in the wake of the subprime mortgage crisis, posting a $10 billion loss in the fourth quarter of last year. That loss was attributable primarily to an $18 billion write-down of assets related to subprime mortgages, according to a report from Gannett News Service.
Citigroup also boosted its loan-loss reserves by $4 billion to cover anticipated losses on consumer loans.
In an effort to cut costs, the company has slashed tens of thousands of jobs worldwide over the past few months. And it acknowledged that more cuts are likely.
Also in the fourth quarter, Citigroup had an additional problem in Connecticut related to a state Treasury investment. The Treasury’s Short-Term Investment Fund had invested $300 million in structured investment vehicles through Citigroup.
When the market started to turn against Citigroup and the Standard & Poor’s rating agency gave Citigroup a negative outlook, that $300 million seemed to be in jeopardy.
But in December, Denise Nappier, the state Treasurer, calmed investors by issuing a letter stating that the banking company would take responsibility for the funds held by the state.
“This decision to take responsibility significantly increases the status and security of STIF’s $300 million invested in Citigroup’s SIVs and provides even greater assurance of full payment of scheduled principal and interest,” Nappier said in her letter.
Citibank was founded in 1812 and has grown into a financial services behemoth over the past two centuries. Its corporate parent, Citigroup, operates divisions, which handle 200 million customer accounts in more than 100 countries.
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