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Citigroup will hold off on its $52.5 billion (£35.5 billion) stock conversion until the US Government announces the result of its stress test on the troubled bank. Shares in the bank declined yesterday by 36 cents, or nearly 9 per cent, to $3.65, despite the news on the conversion coming alongside better than expected first-quarter profits. Citigroup had been expected to complete the conversion this month, in which it will swap up to $27.5 billion of preference shares into common stock. The Government will convert up to $25 billion of preference shares that it holds in Citigroup on top of this amount, giving taxpayers a 36 per cent stake in the bank. The conversion was designed to help the bank, which is propped up with $45 billion of taxpayers’ funds, to save money on payouts to preference shareholders. It will also boost Citigroup’s tangible common equity, a figure that financial regulators are concentrating on as a measure of banks’ ability to withstand further losses. Citigroup did not give its tangible common equity figure when it released its first-quarter results yesterday. In February the Government set America’s largest banks a stress test to judge which companies would need additional bailouts, should the economic environment worsen. The results of the tests are expected late this month or early next month. Yesterday Citigroup continued the run of stronger-than-expected first-quarter bank profits, reporting a $1.6 billion net profit after five consecutive quarters of losses. This compared with a $5.1 billion loss in the first three months of last year. It is the bank’s first profit since Vikram Pandit took over as chief executive in December 2007. In January Mr Pandit split the bank into two groups – one that contains businesses that he wants to keep and another that holds divisions to be sold – as part of a plan to downsize and reduce the risk of the struggling company. Edward “Ned” Kelly, chief financial officer of Citigroup, said: “There are hundreds of billions of assets that we would think about exiting over time.” The positive headline figure, however, strips out losses on bad debts and the huge costs of paying dividends to preferred shareholders. With these numbers included, the bank made a $966 million loss. The figures were also flattered by a $2.5 billion gain on the decreasing market value of its own debt. But even a $966 million slide into the red – equivalent to a loss of 18 cents a share – was better than analysts’ expectations of a loss of 34 cents a share. Revenue doubled in the first quarter to $24.8 billion; however, the bank was hit by $7.3 billion in losses on loans and put aside an extra $2.7 billion in reserves against further souring debts. It shed $116 billion of assets, leaving it with $1.82 trillion. Citigroup also said that it had cut 13,000 jobs since the end of last year, taking its global workforce to 309,000.