Pandit buys time as Citigroup's results better than feared

Citigroup boss Vikram Pandit bought himself some much-needed time today, when he unveiled second quarter results that were better than Wall Street was expecting.

Although the bank still made a loss of $2.5 billion (£1.25 billion) due to yet more write-downs related to the credit crunch and the subprime mortgage debacle, Pandit was able to show that the core business is healthy.

Citigroup shares have halved in the past year as it ran up losses of $45 billion, one of the worst performances by any bank in the world. Analysts have begun speculating that Pandit's days could be numbered if he doesn't get a firm grip on the bank's problems.

Today, he said: "We continue to demonstrate strength in our core franchise. We cut our second quarter losses in half. While there is still much to do we are encouraged by our progress."

Citi wrote off another $7.2 billion for the past three months leading to the $2.5 billion loss. This was $1 billion better than Wall Street had feared. although the worst may be over, some still think the bank should be broken up.

Peter Cohan, a US analyst, said: "I think it is time for Pandit to split Citi into the good bank - the international business is doing well - and the bad bank - just about everything else." The bank has cut 11,000 jobs this year so far. its results follow solid numbers from JP Morgan on Thursday.

Meanwhile, mortgage finance giant Freddie Mac confirmed it was considering an ambitious share sale worth as much as $10 billion to raise funds.

The company is expected to offer the new shares to existing investors. If it can find enough takers the move could avoid the controversial taxpayer-funded government rescue promised to it and sister firm Fannie Mae. The plan has not been finalised, the Wall Street Journal said, quoting insiders.

Freddie Mac and Fannie Mae shares slumped 45% last week on fears they may not have enough capital to cover mortgage losses.

Their survival is crucial to US government attempts to prop up the slumping housing market.

Together they own or guarantee about $5200 billion of mortgages, or nearly half of all US home loans.