Citigroup Inc., Marshall & Ilsley Corp. and Huntington Bancshares Inc. ended 2009 with the biggest drops in the Standard & Poor’s 500 Index, weighed down by defaulting property loans that may add to their declines this year.
Marshall & Ilsley, Wisconsin’s biggest bank, tumbled 60 percent, the index’s biggest drop.
Columbus, Ohio-based Huntington Bancshares fell 52 percent, while Citigroup dropped 51 percent.
Banks accounted for seven of the 10 worst performers in the index.
“The problem is primarily capital, dilution and credit,” said Gary Townsend, president of Hill-Townsend Capital.
Citigroup, which had a $27.7 billion loss for 2008, in December joined Wells Fargo & Co. and Bank of America Corp. in raising cash to escape limits tied to “extraordinary financial assistance” from the government.
Banks sold preferred shares to the government and common shares to investors to cover commercial and residential real estate losses and ensure capital levels exceeded regulatory thresholds.
Citi sold $17 billion in shares at $3.15 each, less than the $3.25 the US paid for a one-third stake in September, prompting the Treasury to delay selling its shares for at least 90 days.