NEW YORK -- Moving to quash rumors about its financial problems, Citicorp said Tuesday that it will not have to boost reserves or writeoffs beyond previously expected levels.
In a tersely worded press release, the nation's largest banking company said that examiners from the Office of the Comptroller of the Currency have completed their annual review. "Credit writeoffs and loan-loss provisions for the fourth quarter are in line with management's expectations," it said.
Stock Price Woes
The unusual announcement came only days after Citicorp's stock price plunged to a 52-week low of $8.625 per share amid rumors of further credit losses and an imminent government takeover.
Citicorp's stock closed at $9.75 per share Tuesday, up 62.5 cents. Bank stocks and the market in general soared in preholiday trading.
Analysts welcomed the statement from Citicorp, calling it an appropriate response by a company that has been the target of unsubstantiated speculation.
Attack by Short-Sellers
"The short-sellers have been all over them," said Allerton G. Smith, an analyst at First Boston Corp. "Clearly, Citi wants to calm the market."
The bank's stock fell below $9 per share last week amid rumors of an imminent takeover by regulators.
The speculation was further fueled by the Federal Reserve Board's one-point discount rate cut Friday, which some short-sellers read as a move to prepare the market for Citicorp's collapse.
Though analysts were comforted by the bank's statement Tuesday, they have no illusions about the company's problems.
Citicorp has been indicating that its writeoffs in the fourth quarter would run between $900 million and $1 billion, some analysts said.
Its reserve for the quarter should range between $100 million and $200 million, they added.
A Bad 3d Quarter
In the third quarter, the company lost $885 million, or $2.72 per share, after taking $930 million in restructuring charges, reserve additions, and writedowns.
A consensus estimate by 11 analysts is that Citicorp will lose 5 cents a share in the fourth quarter and 52 cents for the year, according to Zacks Investment Research.
"There will be very huge consumer writeoffs in the credit card business and huge writeoffs in commercial real estate," said Stephen Berman of County NatWest Wood Mackenzie.
Citicorp said that yearend results will be reported Jan. 21, the date of its next scheduled board meeting.
A Citicorp spokesman would not elaborate on the published statement or on the review.
Analysts applauded the bank's decision to issue the statement. "Management felt it was in possession of material knowledge that could affect its situation," said Mr. Smith of First Boston.
Some sources close to the company said regulators encouraged Citicorp to make the announcement to calm investors' fears.
"The short-sellers have been very effective getting their rumors out there," said Judah Kraushaar, an analyst at Merrill Lynch & Co.