Citigroup shares tumble 25%

New York - Citigroup Inc's largest individual investor gave the troubled bank new support, saying he would boost his stake modestly, but failed to revive investor confidence as the bank's shares tumbled another 25%.

Saudi Prince Alwaleed bin Talal, who plans to increase his stake to 5 percent from less than 4 percent, said the bank's shares were "dramatically undervalued" following a nearly 90% plunge since late 2006.

He also expressed "full and complete support to Citi management," including embattled Chief Executive Vikram Pandit, who earlier this week announced a plan to cut 52 000 jobs.

But investors were unimpressed, and many questioned the bank's ability to withstand what are expected to be billions in additional loan losses in 2009.

Citigroup, which has lost more than half of its value this month alone, was the top decliner among large US banks, but the carnage was widespread. JPMorgan Chase & Co was down 13 percent and Bank of America Corp was off 7 percent.

And in a year that has seen the rescue of giant insurer American International Group Inc and mortgage giants Freddie Mac and Fannie Mae, some speculated about the possibility of government intervention.

"As a company, (Citigroup) can't go bankrupt because they're too big," said Saj Karim, investment adviser at Cannacord Capital in Waterloo, Ontario. "They will get bailed out, and that's another unfortunate strain on the U.S. government."

Citigroup shares fell as low as $4.77, a nearly 14-year low, in morning trade on the New York Stock Exchange.

Citigroup has lost $20.3 billion in the last year and taken tens of billions of dollars of writedowns on mortgage and other toxic debt. Analysts expect it to lose money in the fourth quarter, and some don't expect it to be profitable in 2009.

- Reuters