NEW YORK - HOUSING and credit market turmoil drove Citigroup to its fourth straight quarterly loss and US$13 billion (S$19.2 billion) of write-downs and credit losses, but the giant US bank still wants to acquire deposits after its bid to acquire much of Wachovia Corp failed.

Citigroup, until this quarter the nation's the largest by assets, is in a difficult spot because it is experiencing rising losses from traditional lending operations, such as US credit cards, even as losses continue from repackaged mortgage debt and other securities on its balance sheet.

On top of this, emerging markets, a key engine of Citigroup's growth, are becoming much less profitable and in some countries are big money losers.

Chief Financial Officer Gary Crittenden said in an interview that losses are entering a new phase, moving away from securities writedowns, which can make earnings volatile, and toward consumer losses, which tend to rise more gradually.

'That's an important shift,' Mr Crittenden said, adding that 'we would have interest in looking at businesses like' Wachovia, where the bank could add US deposits without substantial downside risk.

Citigroup investors are looking for signs of stability after the bank posted losses of US$20.3 billion in the last year and more than US$71 billion worth of writedowns and credit losses over five quarters.

The bank's effort to buy Wachovia's retail and investment banking businesses for US$2.16 billion cheered some analysts, who had long pressed the bank to boost its US deposit base, which can provide stable funding. Wells Fargo & Co beat out Citigroup with a US$15.1 billion bid for all of Wachovia.

'We are in an environment where more deposits is better than less,' said Mr Michael Holland, who oversees more than US$4 billion at Holland & Co and does not own Citigroup stock.

JPMORGAN PASSES CITIGROUP IN ASSETS

Citigroup's third-quarter net loss totalled US$2.82 billion (S$4.17 billion),or 60 cents per share, compared with a profit of US$2.21 billion, or 44 cents, a year earlier. Its loss from continuing operations was US$3.42 billion, or 71 cents per share, compared with analysts' average estimates of a 70 cent a share loss.

Revenue fell 23 per cent to US$16.68 billion. Expenses totaled US$14.43 billion, up 2 per cent from a year earlier, but down 8 per cent from the second quarter.

Citigroup shed US$50 billion in assets during the third quarter, ceding its title as the largest US bank by assets to JP Morgan Chase Chief Executive Vikram Pandit is looking to shed US$400 billion of assets to strengthen the bank's balance sheet.

JPMorgan ended September with US$2.25 trillion in assets, compared with US$2.05 trillion at Citigroup. Bank of America would pass both if it completes its planned acquisition of Merrill Lynch & Co in early 2009.

Citigroup also cut 11,000 jobs during the quarter, leaving it with 352,000 employees.

The bank's shares fell 33 cents, or 2 per cent, to close at US$15.90 on the New York Stock Exchange and are down 46 per cent this year. The KBW Bank Index .BKX rose 2.6 per cent on Thursday and broad US market indexes rose more than 4 per cent.

CONSUMER CREDIT DETERIORATES

Quarterly results reflected US$4.42 billion of net writedowns tied to mortgage debt, leveraged loans and other investments, and a US$612 million charge for a regulatory settlement related to auction-rate securities.

Citigroup also reported an 86 per cent increase in credit costs to US$9.1 billion, including US$4.92 billion in net credit losses and a US$3.9 billion increase in loan loss reserves.

On a conference call, Mr Crittenden said there was broad deterioration in consumer credit worldwide, with particular stress in Brazil, India and Mexico. The bank operates in more than 100 countries.

Credit losses have spurred Citigroup to raise more than US$40 billion in capital from investors.

The bank is also receiving US$25 billion from the US Treasury Department's Troubled Asset Relief Programme, one of nine banks to receive initial injections.

'Being handed US$25 billion means they don't have to come to the market and I think that's huge,' said Mr Anton Schutz, president of Mendon Capital Advisors Corp in Rochester, New York, which owns Citigroup shares.

Citigroup's Tier-1 capital ratio, a measure of its ability to cover losses, was 8.2 per cent as of Sept 30, compared with 8.74 per cent three months earlier and 7.12 per cent at the end of 2007. Regulators consider 6 per cent sufficient.

In the interview, Mr Crittenden said the bank has no compelling need to raise more capital now.

He offered few details on how the bank will use the new capital, but said Citigroup wants to expand in retail banking, credit cards, investment banking and trading, wealth management and transaction services. -- THOMSON REUTERS