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Citicorp Reports Loss for Fourth Quarter, Year

January 21, 1992

NEW YORK (AP) _ Citicorp today reported a $133 million loss for the fourth quarter as the nation’s largest banking company continues to wrestle with problem loans and an ambitious corporate restructuring.

The results were in line with projections last week by chairman John Reed.

For the final three months of 1991, Citicorp lost 53 cents a share after taking a hit of $654 million after writing down foreclosed real estate and charging off delinquent commercial loans.

It lost $382 million or $1.26 a share for the October-December period in 1990.

For the year, Citicorp said it lost $457 million, or $1.89 a share, against earnings of $458 million or 99 cents a share in 1990.

Citicorp’s stock was delayed for trading on the New York Stock Exchange in early afternoon. Before release of the earnings, Citicorp was down 50 cents at $14 a share.

In another development, Reed announced the bank added to its management team the former finance minister for the Netherlands, Onno Ruding, 52.

Ruding, finance minister from 1982 to 1989, will serve as vice chairman for international corporate finance. He has been a Citicorp director since 1990.

″...I know the challenges facing Citicorp and I believe we see evidence that John Reed’s plan to address those challenges is on the road to succeeding,″ said Ruding.

The bank reported $9.73 billion in total delinquent commercial loans and foreclosed real estate for the fourth quarter, down from $9.96 billion in the comparable period in 1990.

Total operating expenses fell by 17 percent in the fourth quarter to $2.65 billion. For the year, expenses were flat at $11.09 billion. Citicorp said it trimmed its staff by 9,000 in 1991, with 86,000 on the payroll at year-end.

The bank’s Tier 1 ratio of risky loans and assets to capital was at 3.70 percent at the end of 1991. The ratio, an important measure of a bank’s ability to absorb loan and operating losses, fell short of the 4 percent level that will required by under new international banking laws at the end of 1992.

Reed said in an interview last week the ratio will be above 4 percent by the end of this year.

Last year, Citicorp raised about $1.5 billion in fresh capital from a variety of deals, including a private placement of stock with a Saudi prince.

It has sold a range of interests, from subsidiaries that offer municipal bond insurance to its Italian retail bank and a share of it stake in the Saudi American Bank.

Frank Suozzo, bank analyst for S.G. Warburg & Co., said he believes Citicorp is repairing itself. He compared the bank to BankAmerica Corp. in 1986, when it underwent a grueling overhaul. BankAmerica now is one of the nation’s strongest banks.

″In terms of progress, Citicorp has made, I think, excellent (advances) in terms of expense control,″ said Suozzo.

In addition, Reed said the rate of losses in the bank’s loan portfolio ″has probably stabilized at high level, but it has stabilized.″

But Reed’s assertions don’t mean Citicorp has escaped danger.

″The economy has hurt them from growing out of their problems,″ said Suozzo. Key to Reed’s strategy is building capital through retained earnings, which requires strong cost controls and revenue growth.

Without an improvement by midyear, ″you may see a lot of high-level people beginning to leave,″ Suozzo said.

Cheryl Swaim, bank analyst for Oppenheimer & Co., is critical of Citicorp’s position, particularly with its high level of loan losses and loans written off as bad debt.

″...We continue to believe that earnings at Citicotp will be lackluster compared to other banks for the foreseeable future given the capital and reserve building needs,″ Swaim wrote in a recent report.

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