Shares in Citigroup plummeted again yesterday, bringing its market value decline to about $33 billion (£15.9 billion) over the past week, as the world’s biggest bank heaped further woes on its investors by restating its third-quarter results.

Citigroup followed Sunday night’s announcements about the resignation of Charles Prince, its chief executive, and a further writedown of up to $11 billion on its sub-prime mortgage investments, by knocking 6 per cent off its third-quarter profits yesterday.

The group, which has appointed Robert Rubin, a former US Treasury Secretary, as chairman, reduced its third-quarter profit — already 57 per cent below last year’s — by $166 million to $2.21 billion, to account for declining valuations of its sub-prime mortgage-related investments. Sir Win Bischoff, a former chief executive of Schroders and Citigroup’s European head, will act as interim chief executive.

Mr Prince resigned on Sunday night after his position became untenable in the wake of a $6.5 billion third-quarter writedown, much of it relating to mortgages and buyout loans.

The chief executive’s problems were compounded last week by a note by Meredith Whitney of CIBC, who claimed that the group had a $30 billion capital shortfall and would need to lower its dividend or sell assets. Her view now is that the bank’s only option is to break up the group for a sale.

John Thain, the chief executive of NYSE Euronext and a former president of Goldman Sachs, emerged yesterday as Paddy Power’s favourite to fill the chief executive role, with odds of 5-4. Mr Thain is also thought to be in the running for the top job at Merrill Lynch, after Stan O’Neal stepped down last week.

Gary Crittenden, finance director of Citigroup and the former American Express executive, is Cantor Index’s favourite, with odds of 5-2. Vikram Pandit, the head of Citigroup’s institutional client group, is second favourite with both bookmakers.

Prince Alwaleed bin Talal, Citigroup’s biggest individual shareholder, told the CNBC financial news channel that he favoured bringing back Sanford Weill, Mr Prince’s predecessor. Although Mr Weill is not interested in returning to run the company, he has indicated that he is happy to act as a consultant, CNBC reported.

The scale of Citigroup’s latest writedown, more than double the previous highest estimate, sent shockwaves across the banking industry as investors braced themselves for further investment losses at rival financial services groups. Mr Crittenden said in a conference call: “There’s no way I think anyone can give you an assurance of how things are going to move. We’ve taken what we think is a reasonable stab.”

Citigroup’s shares closed down $1.81, or 4.8 per cent, at $35.90, their lowest since April 2003. Morgan Stanley dropped by 5.6 per cent, Goldman Sachs fell 4.8 per cent and Bank of America was down 1.4 per cent.

Merrill Lynch’s shares fell by more than 2 per cent despite reports that its board had offered the role of its chief executive to Laurence Fink, the head of BlackRock, the fund management group in which the US bank holds a stake. Merrill Lynch refused to comment.

In London, British banks also suffered as Peter Toeman, an HSBC analyst, downgraded a series of banks and gave warning that the credit crunch would be “devastating” for the UK. Barclays shares fell by 2.51 per cent, Royal Bank of Scotland declined by 1.68 per cent and HBOS dropped by 1.94 per cent.

Yesterday Fitch downgraded Citigroup’s credit rating from AA+ to AA after the bank’s recent announcements, which analysts said would leave the group with a fourth-quarter loss of about $1.4 billion.

This would be the first quarterly loss since the bank was formed in 1998 by the merger of Citicorp and Travelers Corp.

Times Recommends

• Lenders face huge hit on mortgage fraud
• Mortgage rescue fund at the ready
• Zoom airline collapses and halts all flights