Citigroup foresees sharp drop in profit

Citigroup Inc. estimated Monday that its third-quarter profit will drop 60 percent, as the nation’s largest bank took losses of more than $3 billion after writing down securities backed by underperforming mortgages and loans tied to corporate buyouts.

The bank also said its profit would be dampened after boosting loan loss reserves by about $2 billion.

Despite the profit decline, Citigroup’s stock, already pummeled because of worries about how the bank fared during the volatile summer months, lifted modestly in early trading, with investors apparently relieved that loan losses weren’t even wider.

Citigroup’s announcement was the latest disappointment resulting from this year’s problems in the mortgage industry and financial markets. Earlier Monday, Swiss bank UBS AG said it will post a third-quarter loss of up to $690 million partly because of losses linked to U.S. subprime mortgages. And Friday, federal regulators shut down a small online bank called NetBank Inc. that failed because of loan defaults.

•UPS shares rose 1.9 percent Monday on news that the world’s largest shipping carrier reached a new five-year contract with the Teamsters union and will move its workers into a single employer pension fund.

Approval of the contract, reached Sunday between union and company officials, is up to union members, who will mail in ballots by early December, International Brotherhood of Teamsters spokeswoman Leigh Strope said.

Pension and health care benefits were major issues in the contract talks.

UPS spokesman Norman Black said UPS will move its employees into a single employer pension fund jointly administered by UPS management and the Teamsters.

The contract would go into effect Aug. 1 if approved by members. The current contract with the Teamsters expires July 31. The Teamsters represent 238,000 of UPS’ 427,700 employees. Those represented include all hourly full-time drivers and part-time sorters.

•Nokia Corp.’s agreement to buy digital mapmaker Navteq Corp. for $8.1 billion shakes up the GPS device market and underscores the intent of the world’s largest mobile phone maker to use more navigation in its handsets and other products.

The deal announced Monday, one of Nokia’s biggest ever, brings the Finnish company’s ample financial resources to a location-based services industry fast accelerating toward mainstream use as consumers embrace the growing variety of applications for global positioning systems.