updated 3/4/2008 3:39:34 PM ET 2008-03-04T20:39:34

Citigroup shares sank about 6 percent to their lowest level in more than nine years, as stockholders recoiled at forecasts of more losses at the troubled bank and comments from a Middle East fund executive that Citi must raise more cash to stay in business.

Samir al-Ansari, chief executive of the $13 billion government-owned investment firm Dubai International Capital, said Tuesday at a private equity conference that it will take more than the combined efforts of the Gulf’s wealthiest investors — the Abu Dhabi Investment Authority, the Kuwait Investment Authority and Saudi Prince Alwaleed bin Talal — to save Citigroup.

Back in January, Citi raised $12.5 billion from a group of investors including the Kuwait Investment Authority, the Government of Singapore Investment Corp. and Prince Alwaleed. And last year, Citi nabbed $7.6 billion from the Abu Dhabi Investment Authority, a sovereign wealth fund owned by the ruling elite of the United Arab Emirates, the world’s fourth-largest oil exporter, in return for a 4.9 percent stake.

But a person familiar with Citigroup, who spoke on condition of anonymity because of the private nature of capital-raising efforts, said the bank is not actively seeking more cash from sovereign wealth funds.

The person said demand for Citi stock had been significantly higher, but the bank decided the $12.5 billion was enough.

The reason many shareholders are selling off is that Citi is poised to suffer additional losses due to defaulting loans. Having already written down $18 billion in bad mortgage-related debt in the fourth quarter, Merrill Lynch analysts predicted that Citi will have to write down another $18 billion in mortgage and other debt in the first quarter, according to Dow Jones Newswires.

Meanwhile, Goldman Sachs analysts issued a note saying a modeling miscalculation led it to overestimate its profit forecast for Citi. Goldman on Tuesday lowered its prediction of a first-quarter profit at Citi of 15 cents a share to a first-quarter loss of a $1 a share. It also reduced its 2008 full-year profit estimate to $1.35 a share from $2.50 a share.

Citigroup shares — which have shed about 50 percent since the credit markets froze up last summer — dropped another 5.6 percent to $21.80 in early afternoon trading Tuesday on the New York Stock Exchange.

In January, Citigroup reported losses of almost $10 billion in the fourth quarter, spurred by $18 billion in write-downs. In addition to capital injections from sovereign wealth funds, the bank has been raising cash through small asset sales of nonessential assets and nearly halving its dividend in January.

“Not only do they need to raise more money, but they should’ve suspended their dividend six months ago,” said Christopher Whalen, managing director of consulting firm Institutional Risk Analytics. “They’re trying to do this in bite-size pieces. But everyone’s still waiting for the other shoe to drop.”

Citi Chief Financial Officer Gary Crittenden said in January the $12.5 billion stake, along with a $2 billion stock sale the bank completed soon afterward, was enough to address “potential capital shortfall under multiple scenarios.”

“They’re saying it’s enough — it’s not enough,” Whalen said, noting that further losses from consumer debt will draw down Citi’s cash levels.

Citi executives pointed in January to the bank’s Tier 1 capital ratio — essentially, its ratio of cash to debt — which lifted from just above 7 percent to 8.8 percent. The Federal Deposit Insurance Corp. says that for a bank to be considered well-capitalized, its Tier 1 capital ratio must be above 6 percent.

Dubai International Capital is an investment firm controlled by Dubai’s ruler Sheik Mohammed bin Rashid al Maktoum. It already owns stakes in HSBC Holdings PLC and Standard Chartered PLC, but not in Citi.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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