Citigroup plans to raise $14.5 billion

By Jonathan Stempel and Dan Wilchins

NEW YORK (Reuters) - Citigroup Inc (C.N) said on Tuesday it plans to raise $14.5 billion, slash its dividend and cut 4,200 jobs to shore up its balance sheet after a write-down for mortgages led to a record $9.83 billion quarterly loss.

The capital infusion includes $12.5 billion from investors including former Chief Executive Sanford "Sandy" Weill, Singapore's and Kuwait's governments, and Saudi Prince Alwaleed bin Talal, the bank's largest individual shareholder.

Adding the much-needed cash may help the largest U.S. bank and new Chief Executive Vikram Pandit survive through the credit market and housing crises. Citigroup announced an $18.1 billion write-down and cut its dividend 41 percent.

"You expected the figures to be shocking," said Simon Maughan, an analyst at MF Global in London. "You cannot say it's definitively over, but you have got to say, 'This is probably the big one.'"

But some analysts had hoped for even larger amounts, and said Citigroup has a tough road ahead.

The bank's shares closed down $2.12, or 7.3 percent, at $26.94 on the New York Stock Exchange, contributing to a 277-point slide in the Dow Jones industrial average .DJI. Citigroup shares have slid 50.8 percent in the last year.

"Citigroup's capital raise coupled with aggressive markdowns by some peers makes us wonder if management couldn't have used more aggressive assumptions to write down this portfolio," Sandler O'Neill & Partners LP analyst Jeff Harte wrote. He rates the bank "hold."

The fourth-quarter loss totaled $1.99 per share, roughly twice as big as analysts expected. It stemmed largely from subprime mortgages, plus a $5.41 billion jump in credit costs, including a $3.85 billion charge to add reserves.