(Update 1: reflects CEO Vikram Pandit’s statements in a company conference call.) In our current market, if a large financial institution so much as sneezes, the vultures perk up their heads, shake out their wings and, in cases where the pickings are promising, start circling even before the firm fails. So when shares of Citigroup Inc. (C) fell 26 percent on Thursday — not exactly a sneeze, but more like a seizure — it follows that there would be some sort of hype about the troubled banking giant with 200 million customer accounts in 100 countries. But Citi didn’t need anyone’s help creating hype. Unnamed bank sources had come forward by late Thursday with information that top executives were in preliminary discussions over selling parts of the company — or perhaps the entire company — according to a story the Wall Street Journal broke late Thursday evening. Citi’s board of directors will meet later Friday to discuss selling options, and officials are lobbying lawmakers and the SEC to reinstate the agency’s expired ban on short selling, the Journal reported. CEO Vikram Pandit also scheduled a conference call Friday morning in which he assured employees he didn’t intend to break up the company or sell its brokerage unit, unnamed sources told Bloomberg Friday. Despite Thursday’s hemorrhage — and the fact Citi’s stocks have lost half their value in just four days, according to a story Thursday by the New York Times — multiple press statements by the bank continue to claim adequate capital and liquidity. A look into the bank’s recent activity paints a picture of volatility, of severe expenditure cuts in response to sweeping third-quarter losses and an increasingly troubled mortgage balance sheet. After losing the struggle with Wells Fargo for the purchase of Wachovia’s assets, Citi posted a $2.8 billion third-quarter loss in mid-October; the loss was driven by $4.4 billion in write-downs, $4.9 billion in net credit losses and a $3.9 billion allowance to increase loan loss reserves. The company on Nov. 11 announced an initiative to launch a joint foreclosure moratorium and loan modification plan for some 136,000 troubled mortgage customers expected to qualify. Then, on Monday, it announced it will cut as many as 53,000 jobs in coming months. U.S. Treasury Department secretary Henry Paulson announced last week he would turn TARP funds away from troubled mortgage-backed assets and toward securitized credit card debt and nonbank capital. It was a move that took the Treasury lifeline out of the hands of Citi’s troubled mortgage portfolio, although the bank had already issued $25 billion in preferred stock to the Treasury under the TARP Capital Purchase Program. On Thursday, Citi announced it would acquire the remaining assets of its Structured Investment Vehicles (SIVs) at a value of $17.4 billion, net of cash, in a transaction that “will result in the SIVs’ having sufficient funds to repay maturing senior debt obligations.” The SIVs formerly operated off Citi’s balance sheets. The acquisition effectively guarantees the SIVs’ debt — and adds a hefty load of troubled debt to Citi’s balance sheets. Write to Diana Golobay at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.