Citigroup’s standing as America’s pre-eminent bank is slipping, according to financial industry insiders.

The largest bank according to assets yesterday reported a fourth-quarter net loss of nearly $10 billion, and said revenue plummeted 70%, to $7.22 billion. To shore up its balance sheet, Citigroup is raising billions from foreign governments, including those of Singapore and Kuwait.

It also announced 4,200 job cuts, many of which could be in New York City, where Citigroup is headquartered and is one of the city’s largest private employers.

The bank’s stock tumbled yesterday by 7.4%, to $26.94, and Standard & Poors downgraded it one notch to AA- with a negative outlook.

“News of these losses has spread all over the world, and many banks and investors have been affected,” the executive vice president at Pioneer Investments, John Carey, said. “It certainly hasn’t helped the reputation of our financial community abroad.”

“The concentration of Citigroup’s operations in terms of their retail banking is very concentrated in the New York area,” an economist at Global Insight, Brian Bethune, said. “People’s views could affect their capability to offer consumer loan products and other services.”
Not only in New York has the perception of Citibank begun to shift, but also in Europe.

“Basically, the reputation of American financial firms is going to be shattered,” the president of one hedge fund, Euro Pacific Capital, Peter Schiff, said. “Banking is just another industry we are going to lose our dominance in, just as we did in manufacturing.”

Citigroup’s losses are likely to have far-reaching effects on the New York City economy. “It’s going to hurt in terms of jobs, it’s going to hurt in terms of tax revenues, which is how we pay our teachers and police officers and everyone else,” Mayor Bloomberg said yesterday. While the city has worked to diversify the economy away from financial services, “we certainly are still very dependent on Wall Street,” he said.

Citigroup is expected to make cuts in several well-paid divisions that have a major presence in New York, including the securities and banking division, transaction services, the retail and lending businesses, and private wealth management.

Citigroup announced a net loss of $9.83 billion, or $1.99 a share, due to $18 billion in write-downs in the fourth quarter. It would raise money by selling stakes to Singapore’s Government Investment Corp., the Kuwait Investment Authority, a former CEO, Sandy Weill, and New Jersey’s investment division. The bank also announced it would cut its dividends by 41%.

“In general I’ve been supportive of foreign investment because I think it creates jobs here in America,” Senator Schumer said yesterday evening during a press conference at his Manhattan office, “but one place where you worry about it is when it is government sponsored entities because they have politics as opposed to just economics. The Citigroup package passed a smell test because there was not anything close to control by any one foreign entity, but it’s something that Congress is going to look at closely over the next few months.”

Citigroup declined to comment for this article but the new CEO, Vikram Pandit, called the results “clearly unacceptable” in a statement. “We have begun to take actions to ensure that Citi is well positioned to compete and win across our franchises while effectively keeping a tight control over our business risks.”