Citigroup's options dwindle as shares under $4

NEW YORK — Citigroup's options are dwindling along with its stock price as the credit landscape deteriorates and fears escalate about future loan losses at the company.

As the banking giant's shares slid below $4, analysts said Friday it may be forced to merge or sell some of its prized businesses.

Citigroup has already raised $75 billion in capital this year, including a $25 billion cash investment from the government — and none of it has been enough to muster confidence.

Raising more money on the open market is "pretty much off the table" with shares at $4, said William Fitzpatrick, an equity analyst at Optique Capital Management Inc. And raising more cash from outside investors or the government would be "a Band-aid."

"You're going to have to see more sizable divestitures," Fitzpatrick said. "They're going to have to make changes here, and they don't have time on their side anymore."

The New York-based bank is scheduled to hold a board meeting Friday to discuss whether to sell all or part of itself, the Wall Street Journal reported.

Citigroup's shares tumbled below $4 a share to their lowest level in more than 15 years, continuing a sharp, week-long plunge that could not be stemmed by Saudi investor Prince Alwaleed bin Talal's decision Thursday to raise his stake in the company to 5 percent from less than 4 percent.

The shares have shed 60 percent of their value since last Friday.

An outright sale shouldn't be ruled out, but it appears unlikely, said Alois Pirker at Aite Group. Not only are there few potential buyers right now, but "firms prefer to cherry pick," he said. "If you don't have a well integrated shop, the benefit of taking over the whole versus pieces diminishes."

Pirker said sale opportunities include Citi's Global Transaction Services business and its brokerage, Smith Barney. Pandit has said in the past that these two businesses are important to Citigroup — but these two franchises are not core to retail banking and would be attractive to potential buyers, Pirker said, because they have performed well in the recent turbulent environment.

Selling off the businesses in a particular region is another option, Pirker said. Recently, Citigroup sold off its retail banking business in Germany — it could do the same with Japan, for example, he said.

Citigroup could also consider a merger rather than an outright sale.