U.S. banking giant Citigroup Inc. today reported a fourth quarter net loss of US$9.83 billion, in addition to announcing a large capital infusion and a lower dividend.

These latest results include US$18.1 billion in pre-tax write-downs and credit costs on sub-prime related direct exposures in fixed income markets, and a US$4.1 billion increase in credit costs in U.S. consumer primarily related to higher current and estimated losses on consumer loans. For the full year 2007, net income was US$3.62 billion.

“Our financial results this quarter are clearly unacceptable,” said Citi’s new CEO, Vikram Pandit, in a news release. “Our poor performance was driven primarily by two factors — significant writedowns and losses on our subprime direct exposures in fixed income markets, and a large increase in credit costs in our U.S. consumer loan portfolio. Looking beyond these two factors, revenues and volumes continued to grow strongly in a number of our franchises and we generated record results in international consumer, transaction services, wealth management, and advisory.”

“We have begun to take actions to ensure that Citi is well positioned to compete and win across our franchises while effectively keeping a tight control over our business risks. We are taking several steps to strengthen our capital base, including today’s announcement regarding an investment in Citi by several long-term sophisticated investors, our dividend reset, and our continued focus on divesting non-core assets and businesses. We are taking actions to enhance our risk management processes and to improve expense productivity. We are also in the midst of a thorough review of our businesses, which when complete, will drive our execution priorities,” Pandit added.

Citigroup also today announced that it is taking several actions to enhance its capital base.

The bank is raising US$12.5 billion through a private placement of convertible preferred securities. The privately offered preferred stock will have a coupon of 7% and a conversion premium of 20%, each subject to adjustment in certain limited circumstances.

It also announced a public offering of approximately US$2 billion in convertible preferreds and preferreds. And, it is lowering the quarterly dividend to 32¢ per share.

The private offering is complete, subject to settlement, and includes a US$6.88 billion investment from the Government of Singapore Investment Corporation Pte Ltd as well as investments from Capital Research Global Investors; Capital World Investors; the Kuwait Investment Authority; the New Jersey Division of Investment; HRH Prince Alwaleed bin Talal bin Abdulaziz Alsaud; and Sanford I. Weill and The Weill Family Foundation.

Each of the private investors has agreed to cap ownership at specific levels based on bank regulatory and foreign ownership provisions and other considerations. Each investor acted individually in making its investment; there has been no coordination or negotiation among these investors; and the entities have agreed not to act in concert with one another or others, the bank said. In addition, none of the investors will have any special governance rights or any role in the management of Citi, including no right to designate a member of the Citi board.

The firm says that the public offering is in response to investor demand, and the convertible preferreds will allow investors to buy securities on similar terms as the private deal.

The company said it is continuing to reduce its consumer-based holdings of mortgage-backed securities, and other assets held in its securities and banking business. Overall, in the fourth quarter, the company reduced its GAAP assets by approximately US$176 billion, representing approximately 7.4% of its balance sheet.

Assuming only the settlement of the private offering and the completion of the Nikko Cordial transaction, scheduled for later this month, on a pro forma basis for the fourth quarter, Citi’s Tier One capital ratio would be approximately 8.2%.

“We are taking comprehensive action to position Citi for the future with the capital strength that will allow us to refocus on earnings and earnings growth,” said Vikram Pandit, CEO of Citi. “In an uncertain environment, these actions put us on our ‘front foot,’ focused on capturing opportunities that earn attractive returns for our shareholders.”

“GIC is a widely-respected, long-term oriented financial investor, and I have known the principals for years. We are delighted that they and other important investors have decided to make a significant financial investment in our firm. These investments mark a clear vote of confidence in the future of this great institution,” Pandit added.

@page_break@Since November, Citi has sold US$7.5 billion of equity units to the Abu Dhabi Investment Authority, issued additional debt securities with capital benefits of approximately US$4.3 billion, taken steps to substantially enhance its risk management organization, restructured certain businesses, including its Institutional Clients Group, capital markets business, mortgage operations and corporate center, and consolidated Citi-advised Structured Investment Vehicles onto its balance sheet.