Citigroup falls to lowest since 1998 creation

By Jonathan Stempel

NEW YORK (Reuters) - Citigroup Inc (C.N) shares on Tuesday fell to their lowest level since the October 1998 creation of the largest U.S. bank from the merger of Travelers Group and Citicorp.

Shares fell as much as 8 percent to $14.01 before rallying as bank shares rebounded. In afternoon trading, the shares were down 14 cents at $15.08 on the New York Stock Exchange. The bank is in the Dow Jones industrial average .DJI.

Citigroup shares have fallen by more than two-thirds in the last year, wiping out more than $180 billion of market value, as losses have mounted from subprime mortgages, complex debt and deteriorating consumer credit.

The bank lost close to $15 billion in the six months ended March 31, and analysts on average expect it on Friday to post a second-quarter loss exceeding $3 billion.

"It's an incredibly complex organization to examine from an earnings standpoint, so I'm not sure I know how much of the stock price reflects fear and how much is fundamental," said Jim Huguet, chief executive of Great Companies LLC in Tampa, Florida. He said he does not own Citigroup shares because the company hasn't shown it can generate double-digit earnings growth.

Citigroup has had more than $46 billion of write-downs and credit losses since the middle of 2007. It has also cut its dividend 41 percent and raised more than $40 billion to shore up capital. The shares peaked above $59 in the summer of 2000.

Sanford "Sandy" Weill, who had run Travelers, built Citigroup into a financial "supermarket" operating in more than 100 countries.

He persuaded the Clinton administration and Congress to abandon a Great Depression-era rule, Glass-Steagall, designed to separate banks, securities firms and insurance companies.