Shares in Citigroup, the world’s biggest bank, slid another 2.25 per cent yesterday, despite the promotion of a veteran debt troubleshooter to draw a line under the group’s losses.

The value of Citigroup stock has fallen nearly 8 per cent in two days after the Wall Street bank ousted Charles Prince, its chairman and chief executive, and said that it would have to write off between $8 billion (£3.8 billion) and $11 billion of bad debts.

Yesterday, the bank said it had promoted Richard Stuckey, part of its fixed-income team, to unravel the group’s sub-prime borrowings, which would all be placed into one $43 billion pool. The day before the bank had appointed Robert Rubin, the former Treasury Secretary, as chairman.

Mr Stuckey has been credited with helping to sort out the remains of Long Term Capital Management, the hedge fund that was saved from going bust in 1998 after a $3 billion bailout by Wall Street’s biggest banks.

In an internal memo, Citigroup said that it would pool most of its sub-prime debt into one large portfolio that would be run by Mr Stuckey.

In total, the bank has about $55 billion of sub-prime debt, of which $43 billion is collateralised debt obligations (CDOs). That debt includes bonds backed by mortgages taken out by people with low incomes and bad credit histories. As America’s housing market slid into its worst recession in 16 years, the adjustable interest rates on a number of sub-prime mortgages rose sharply, forcing a swath of borrowers into arrears with their mortgages. The bonds issued on the back of those mortgages are now effectively worthless.

Mr Stuckey’s task is to manage the $43 billion portfolio by either selling the investments on without being forced to reduce their price even further, or retain them. The fund will be managed within the sub-prime portfolio group, of which Mr Stuckey will be the head. He begins his new role immediately.

Wall Street is afraid that the market for sub-prime mortgage debt will deteriorate further and that Citigroup will have to write off more as the value of its assets sinks.

On Monday, as the bank admitted to new writedowns of up to $11 billion, it refused to rule out increased losses. In a call with analysts, Gary Crittenden, Citigroup’s chief financial officer, conceded that the bank did not hedge its sub-prime debt effectively before the credit markets froze up over the summer, when worries about soaring sub-prime mortgage defaults led investors to avoid the credit markets and banks to slash the value of their CDOs.

The bank said yesterday that it was trying to ring fence its existing sub-prime debt by “removing . . . them from the structured credit portfolios, and they will be managed separately from the remainder of our . . . business lines. Other structured credit and sub-prime positions – and any new future activity– will continue to be managed within existing . . . business lines.”

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