The credit crunch took a further toll on Citigroup yesterday as America’s largest bank announced an extra $15.2 billion (£7.6 billion) hit and said that it would cut another 9,000 jobs worldwide.

The bank’s latest writedown gave it an overall loss of $5.11 billion for the first quarter and took its total hit from the credit crisis to $33 billion over the past nine months.

The 9,000 job cuts are much higher than the 1,800 redundancies expected in this round of layoffs and are on top of about 21,000 cuts made globally in the past year. About 300 of the latest redundancies will be in London.

The shares closed up $1.08, or 4.5 per cent, at $25.11, despite the larger-than-expected writedown, as investors welcomed the news that the bank was tackling its huge cost base. At the same time, the absence of unexpected news from Citigroup helped to propel the Dow Jones industrial average up 218 points at lunchtime to 12,838.00.

Oil is the key to world recovery

The shock of $140 oil has created inflationary and deflationary pressures that threaten world economy and policy tools

• Former President Bush energy adviser says oil is running out

Background

• Oil is the key to world recovery

• Banks may need to pump billions into scheme

• UK economic growth weakest for three years

Related Internet Links

• Full credit crunch coverage

Background

• Happy days are over for UK households

• Banks restrict mortgages by brokers

• Credit crunch halves lending at Nationwide

• JPMorgan to cut Bear Stearns jobs

• George Soros: Crunch will bite deeper in UK

Related Links

• Merrill Lynch to cut jobs after $6.5bn write-off

• Citi and Merrill may seek new funds to plug losses

• Citigroup withdraws loans to US students

Gary Crittenden, chief financial officer, said: “This is a difficult business environment. There are no easy answers here, no silver bullets.”

In recent months, Citigroup has raised about $30 billion from investors, mainly from sovereign wealth funds in Singapore, Kuwait and Abu Dhabi, to replenish its capital reserves. Although Mr Crittenden said that he had no plans to raise further cash he added: “You can never say never.”

He also said that on Thursday Citigroup had closed the sale of a $12 billion portfolio of loans financing leveraged buyouts, but he would not reveal the terms of the deal. Sources said last week that the average price of the loans was expected to be just below 90 cents on the dollar. Citigroup’s latest writedown and redundancies cap a week in which several rivals have announced similar sub-prime-related losses and cost-cutting measures to tackle them.

Merrill Lynch revealed a further $6.5 billion hit on Thursday and said that it would cut another 4,000 jobs worldwide, of which about 400 are expected to come in the City. On the same day it emerged that UBS was preparing to cut about 900 banking staff in London next month, about 10 per cent of its workforce in the City, as part of a much larger global cutback.

On Wednesday, JPMorgan and Wells Fargo revealed credit crunch write-offs of $5.1 billion and $2 billion, respectively.

Wachovia, America’s fourth-biggest bank, kicked off the week by announcing a surprise first-quarter loss after it was forced to take a $4.4 billion writedown on its portfolio of home loans and mortgage-backed securities.

Citigroup’s latest writedown included a $6.1 billion decline in the value of its sub-prime mortgage bond portfolio and $3.1 billion on loans made to finance private equity deals. It also wrote off $1.5 billion worth of insurance taken out against defaults on its sub-prime bond investments, amid fears that the underwriters would be unable to pay out on some policies.

Citigroup took a further $1.5 billion hit on its portfolio of so-called auction rate securities, as the market for such assets dried up in the first quarter. The bank also took a $3.1 billion writedown in its global consumer division as the housing crisis fed through into later car loan and credit card payments.

Citigroup’s loss equates to $1.02 a share, compared with a profit of $1.01 a share a year earlier. Group revenues fell by 48 per cent to $13.2 billion.

How the blows fell:

Monday
Wachovia announces a surprise first-quarter loss after taking a $4.4billion loss on its portfolio of homeloans and mortgage-backed securities

Wednesday
JPMorgan announces a $5.1billion first-quarter hit from the credit crunch and Wells Fargo a $2billion hit

Thursday
Merrill Lynch reveals its first-quarter hit of $6.5 billion.

Friday
Citigroup announces a $15.2 billion first-quarter writedown on the fallout from the housing crisis

Times Recommends

• House prices falling fastest in 18 years
• Britain 'faces full-year fall in GDP'
• Savills millionaire clients feel property crunch