Citigroup breaks the buck
Shares of the embattled financial firm dip below $1 a share, as investors continue to have a dire outlook for the bank.
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| The deterioration in Citigroup stock over the past two years has meant billions of dollars in lost value for company shareholders. |
NEW YORK (CNNMoney.com) -- Citigroup, once considered one of the nation's mightiest financial institutions, logged another dismal milestone Thursday, as shares of the beleaguered bank slipped below $1 a share.
The move, which may have seemed unthinkable just months ago, came as the broader market fell once again toward new 12-year lows due to worries about the health of the banking sector and the broader economy.
After falling as low as 97 cents a share midday, Citigroup (C, Fortune 500) pared some losses and finished the day at $1.02, down 10% from Wednesday's close. It marks the lowest level for the bank's stock since Citicorp and Travelers Group merged in 1998 to create Citigroup.
Shares of other big banks finished sharply lower as well Thursday. Bank of America (BAC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) declined 12% and 14% respectively. Regional banks Fifth Third (FITB, Fortune 500) and Milwaukee-based Marshall & Ilsley (MI, Fortune 500) lost more than 20% each.
Citigroup stock, which is one of the 30 companies that make up the Dow Jones industrial average, traded around $57 at its peak. That was in late 2006, just months before subprime mortgages began to become problems and the credit market unraveled.
But fears about Citigroup's exposure to soured mortgages and other consumer loans have sent shares plummeting this year, wiping out billions of dollars in shareholder value as a result.
The bank reported losses of nearly $28 billion last year and investors remain worried that the bank will continue to lose money as the economy weakens.
"At the end of the day it just underscores the shared ruin that has really been forced on the system through the credit crisis," said Peter Kenny, managing director of institutional sales at Knight Equity Markets in Jersey City, New Jersey.
The stock lost more than half its value last month alone as speculation grew that the government would have to step in and effectively nationalize the company.
Last Friday, the government unveiled plans to convert a portion of its $45 billion stake in Citigroup into common shares, a move that could give taxpayers as much as a 36% stake in the bank.
Those efforts represented the latest government-led efforts aimed at propping up the ailing financial institution.
In October, the Treasury Department injected $25 billion into the company. Less than two months later, regulators intervened again with an additional $20 billion investment and an agreement to backstop some losses against more than $300 billion in Citigroup's troubled assets.
Since then, Citigroup has outlined plans to split the company into two businesses, effectively bringing an end to the company's "financial supermarket" model. Under the new arrangement, Citigroup would split itself into two units: Citicorp and Citi Holdings.
When asked about Citigroup at a hearing Thursday before the House Budget Committee, Treasury Secretary Tim Geithner said the Obama administration was prepared to provide ongoing support to those parts of the financial system that need assistance.
"It is very important -- and we will do this -- to make sure that the major institutions in our country have the resources and the funding and the ability to play their continuing role in our markets going forward," he said.
Citigroup, which ranks as the nation's second-largest bank based on assets, employs more than 300,000 workers in over 100 countries.
The bank, which once had the largest market capitalization of any financial firm, is now valued at just $5.5 billion. Through Wednesday's close, Citigroup was merely the 27th largest of 81 financial firms in the S&P 500 as ranked by market value. 
