WASHINGTON - US BANKING giant Citigroup said late on Thursday it had $2 billion (S$2.96 billion) in direct gross exposure to Netherlands-based chemical giant LyondellBasell.

The exposure since December 31, 2008 is primarily held in its institutional clients group, Citi said in a statement.

Citi said that LyondellBasell had an estimated pre-tax impact of 1.4 billion dollars in the fourth quarter, recorded primarily as a loan loss reserve build.

'The final impact on Citi's fourth quarter financial results could differ from the impact disclosed,' the banking group said, 'due to closing and other adjustments'.

Citigroup is the first major financial institution to indicate how much of an impact the collapse of the third largest chemical group in the world would have on its accounts.

Swiss bank UBS had recognised on Wednesday that it would face losses from LyondellBasell's collapse, although it refrained from indicating the amount of the loss.

Before Citi's announcement, analysts said that the group would announce a loss of 0.76 dollars per share in the fourth quarter and 2.90 dollars per share over the whole year.

One of the institutions worst hit by the financial crisis, Citigroup has already recorded four straight quarters in the red. In October, it reported that its latest quarterly loss was $2.8 billion.

In late November, the US government stepped in to guarantee over $300 billion in potential losses at Citigroup and pump $20 billion more into the financial giant.

LyondellBasell announced on Tuesday it had filed in the US for Chapter 11 bankruptcy protection, after falling prey to a collapse in demand for its products and a sharp increase in the cost of raw materials.

The petrochemical giant said it has up to $8 billion of funds - including $3.25 billion in fresh funds - to finance its activities during the restructuring period.

Citi said it was participating in LyondellBasell's debtor-in-possession financing. -- AFP