S&P puts Citigroup on watch

Standard & Poor's said it placed the AA-/A-1+ counterparty credit rating of Citigroup Inc. and the AA long-term counterparty credit ratings of its subsidiaries on CreditWatch with negative implications.

Citigroup's announced loss of $5.1 billion for the first quarter reflects not only further marks to market of securities but large additions to reserves in anticipation of further deterioration in its loan portfolio, the agency said, adding that the latter issues could represent another wave of problems that would depress earnings for the medium term.

S&P's review will focus on the firm's prospects for returning to adequate levels of profitability in the near future. To maintain the ratings, the agency said it would need to be convinced that Citigroup will be returning to a high level of earnings in the relatively near term, will maintain loan quality that is not worse than other highly rated banks through this cycle and will sustain high levels of quality capital.

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