Citi Racks Up $10B Loss

The dividend reduction comes after weeks of denials by Pandit, who had repeatedly said that Citi's payout would not need to be cut, and highlights the challenges the bank has been facing to stabilize itself.

"We are taking comprehensive action to position Citi for the future with the capital strength that will allow us to refocus on earnings and earnings growth,'' said Pandit in a press released statement.

If Cramer's Wrong About Recession, Explain Citi

Citi shares have lost nearly half their value over the past several months as the company that boasts offices in about 100 countries tries to right itself after a heady year in credit and mortgages upended most financial firms. Citi shares were down 4.2% to $27.83 in Tuesday morning trading.

The bank is also expected to reduce head count by about 4,200 and has set aside about $539 million pretax (about $337 million after tax) in anticipation of future job cuts. Chief Financial Officer Gary Crittenden did not provide details on the cuts during Citi's earnings call with analysts but said they were ongoing.