Citicorp capped a tumultuous trading day on Tuesday by disclosing that its Russia-related losses would cut into third-quarter net income by $200 million.
Worries about the exposure whipsawed Citi's shares throughout the day, driving them down as low as $98.75 and as high as $109.9375. Shares closed at $106.625, off $1.6875, lagging the market rebound.
Citicorp fell 1.56% on a day when bank stocks and the rest of the market recouped some of Monday's steep losses, which were brought on by market jitters about international economic problems.
In the past three trading days, banks and brokerages have announced reverses because of their exposure in Russia.
On Tuesday, Bankers Trust Corp. said it had incurred trading losses of $350 million because of Russia's ruptured economy and the fluctuating global markets.
Salomon Smith Barney said Monday that it had been hit by $360 million of losses in global bond trading in Russia. BankAmerica Corp. announced similar losses Friday.
Market experts pinned Citicorp's slide on Salomon Smith Barney's announcement. Salomon Smith Barney is a subsidiary of Travelers Group Inc., which announced a merger deal with Citicorp earlier this year.
Reached for comment before Citicorp's disclosure, Scott Edgar, director of research at Sife Trust Fund, said the stock had been dragged down mostly by Smith Barney's announcement.
"But people also have worries about Citicorp because of its global operations overseas and because Bankers Trust said that it will post losses for the third quarter."
Others in the market expected Chase to make a similar announcement Wednesday. Chase officials declined to comment.
Bank analyst Ronald Mandle of Sanford C. Bernstein, who last Thursday cut his 1998 earnings estimate for Citicorp to $2.30 per share from $2.35, said Tuesday before the announcement that he had not gone far enough. Nevertheless the analyst was still advising clients to buy because the stock is cheap.
During morning trading, Citicorp's shares briefly fell below $100. Two years ago analysts and company officials celebrated the stock's first rise over the $100 mark.
Meanwhile, many bank stocks made a limited recovery Tuesday. The Standard & Poor's bank index rose 3.32%, to 565.62, and the Dow Jones industrial average 3.82%, to 7827.46. The Nasdaq Bank index climbed 1.96%, and the S&P 500 jumped 3.86%.
Investors remained cautious in a market where bargain hunters were on the prowl for cheap stocks. Some of the biggest gainers included M&T Bank Corp., which rose $26, to $436; Fleet Financial Group $4.8125, to $69.875; and Northern Trust Corp. $5.375, to $61.125.
Seeking to defend their stocks in the wake of Monday's rout, smaller banks and thrifts announced a flurry of share buyback plans on Tuesday. Among them: Coastal Bancorp, Houston; Citizens First Financial Corp., Bloomington, Ill.; Financial Federal Corp., New York; MAF Bancorp, Clarendon Hills, Ill.; and Reliance Bancorp, Garden City, N.Y.
