Citigroup posts $8.29bn loss

Citigroup has reported a loss of $8.29 billion (£5.6 billion) for the fourth quarter amid fears the bank would have to seek more cash from the government.

For the full year, the bank posted a loss of $18.72 billion on huge writedowns on the back of the US subprime mortgage sector crisis.

Earlier this week shares in the bank plunged ahead of the results, as investors feared the bank may not be able to support the expected losses.

However, shares rose after the announcement as Citigroup said it would break itself up to focus on the more profitable areas of banking.

The bank will split its business into Citicorp and Citi Holdings, holding all the units it wants to keep in Citicorp, which include the group's retail, commercial and private banking arms.

In addition, the US government agreed to guarantee up to $306 billion (£205 billion) of toxic assets on Citigroup's balance sheet.

Investors were also reassured by the government's move this morning to inject $20 billion into rival Bank of America, which is struggling under the weight of its Merrill Lynch buyout last year.

Citigroup chief executive, Vikram Pandit, said: "We continued to make progress on our primary goal in 2008 - which was to get fit."