Banking giant Citigroup is to split the company into two parts after suffering losses of $18.7bn last year.

Struggling US banking giant Citigroup has announced plans to split the firm in two, as it reported a quarterly loss of $8.29bn (£5.6bn

It said it would realign into two new firms, Citicorp and Citi Holdings.

Citicorp will handle the company's traditional banking work, while Citi Holdings will take on the firm's riskiest investment assets.

Last autumn, Citigroup had to be rescued by the US government in a bail-out deal totalling $45bn.

The government also agreed to guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books.

'Ongoing efforts'

"Given the economic and market environment, we have decided to accelerate the implementation of our strategy to focus on our core businesses," said Citigroup chief executive Vikram Pandit.

"This will help in our ongoing efforts to reduce our balance sheet and simplify our organisation.

"We are setting out a clear roadmap to restore profitability."
Citigroup's net loss for the last three months of 2008 works out at $1.72 per share, worse than analyst expectations of $1.31.

Its quarterly revenues were down 13% to $5.6bn, which Citigroup said reflected "the impact of a difficult economic environment and weak capital markets".
"I think people knew it was going to be bad, but I'm surprised it's this bad," said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati.
Redundancies

For 2008 as a whole, the bank made a net loss of $18.72bn.
It blamed the losses on having to write-off bad debt and the cost of making redundancies.
The firm cut 52,000 jobs last year as its losses mounted against the backdrop of the sharp downturn in the US mortgage market and the resulting global credit crunch.

"We are committed to helping the financial markets recover as quickly as possible," added Mr Pandit.

The firm added that it also expected further departures from its board of directors.

It was announced last week that director Robert Rubin, a former US Treasury Secretary is to leave the firm.