Citigroup to sell $3 billion of shares

Citigroup Inc. said Tuesday that it planned to sell $3 billion of common stock to bolster its capital levels, sending its shares down in after-hours trading.

The largest U.S. bank is raising capital after suffering a $15-billion net loss over the last two quarters and reporting more than $45 billion in write-downs and credit losses since June 30.

Chief Financial Officer Gary Crittenden said Citigroup had received “strong” interest in the public offering. The company said the issue might grow in size.

Since late last year, Citigroup has raised more than $36 billion, including last week’s sale of $6 billion of preferred stock. The bank also is selling assets, such as a $12-billion leveraged loan portfolio sold this month to private investors.

Analysts said selling shares made sense after Citigroup stock rose 46% from the low of $18 on March 17, a level not seen since October 1998, on optimism that the worst of the write-downs has passed. The offering is the first in Citigroup’s recent capital-raising to involve common stock.

“Obviously it’s dilutive, but it’s smarter than going out and having to pay a high premium for a preferred issuance,” said William Smith, chief executive of Smith Asset Management.

Citigroup plans to sell the stock today, people briefed on the matter said.

Shares of Citigroup fell 80 cents, or 3%, to $25.52 in after-hours electronic trading. They had fallen 49 cents during regular trading to close at $26.32.

Other U.S. banks to raise capital this month include Bank of America Corp., Wachovia Corp., Washington Mutual Inc. and National City Corp.