NEW YORK -- Citigroup will radically shrink its troubled mortgage business in a bid to save US$2 million a year, the American financial giant announced Thursday.
The New York-based bank plans to integrate its mortgage businesses, including Citi Home Equity and Citi Residential Lending, into CitiMortgage.
The new division will focus on issuing mortgage loans eligible to be sold to government-sponsored companies, such as Fannie Mae and Freddie Mac.
The plan will cut residential mortgage assets in Citigroup's US mortgage business by about US$45 billion in the next year, marking a 20 percent drop from December 2007.
The bank also intends to slash the volume of originally planned new mortgage loans by half during the next 12 months.
Citigroup has been badly hit by the US housing downturn last year, resulting in a huge fourth quarter loss of US$9.83 billion, which contributed to the resignation of former chief executive Charles Prince.
The group is now struggling to rearrange its troubled mortgage businesses, and stem losses by raising fresh capital from foreign investment funds, as well as slashing more offices to save costs.