Citigroup dividend? Not before 2012, CEO Vikram Pandit says

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Citigroup Inc. shares slumped Tuesday after the banking giant’s fourth-quarter earnings fell short -- and after Citi failed to offer a positive surprise on the question of resuming cash dividend payments to shareholders.

The stock, which last week topped $5 a share for the first time since August 2009, was down 25 cents, or 4.9%, to $4.88 at about 11:50 a.m. PST. The price fell as low as $4.78 earlier.

Buyers had been piling into Citi shares since Dec. 6, when the U.S. Treasury sold the last of the stake it took in 2008 for bailing out the bank. The stock closed at $4.45 on Dec. 6, and rallied 15% from there to $5.13 on Friday.

But fourth-quarter earnings on Tuesday came in lighter than expected, at 4 cents a share compared with the 7 cents analysts had estimated. Citi blamed weak results in its stock and bond trading unit.

Also, CEO Vikram Pandit reiterated on a conference call with analysts that he expected the bank to “return capital” to shareholders beginning in 2012.

Translation: If you’re waiting for Citi to resume payment of dividends, give it another year at least.

By regaining its independence from the Treasury, Citi put itself in position to begin paying dividends to long-suffering shareholders. They saw their quarterly payout plunge from 54 cents a share in 2007 to zero in 2009 as the bank nearly collapsed under the weight of bad loans.

But Pandit said Citi wanted to make sure it was in “the right place” in terms of its capital buffer before starting to share some of its accumulated cash with investors.

And “by the way, as I said in the past, we think it’s always prudent to carry a little bit of a cushion,” beyond whatever capital base regulators mandate, Pandit said on the conference call.

“You take all of that into account, we still think 2012 is the right year for us to return capital,” he said.

Many of Citi’s big rivals, including JPMorgan Chase & Co., are expected to boost their dividends before 2012. JPMorgan CEO Jamie Dimon last week said an increase in the bank’s payout may come as soon as next quarter, if regulators give their OK.

-- Tom Petruno