NEW YORK (Reuters) - Citigroup Inc faced growing uncertainty on Wednesday about whether it could ever function well, leading investors to drive its shares down below $5.00 to their lowest level since the bank won a government rescue in November.

More bad news is expected on Friday, when the bank plans to report quarterly results, six days ahead of schedule. A fifth straight multibillion-dollar loss is expected. The bank is also widely expected on Friday to provide details on a comprehensive downsizing designed to ensure its survival.

Rival JPMorgan Chase & Co also moved up its earnings release six days, and is due to report on Thursday.

Once the world’s largest bank, Citigroup is expected to shrink by about a third as it focuses on corporate, investment and retail banking and trims its trading operations, a person familiar with the plan said. Citigroup will also put businesses and assets it no longer wants into a separate structure, with an eye toward eventual sales, the person said.

This follows infusions of $45 billion of taxpayer funds from the Treasury Department’s Troubled Asset Relief Program, including $20 billion in a November 23 bailout where the government agreed to share in losses in exchange for preferred stock and warrants. That helped avoid a collapse, on the heels of the Lehman Brothers Holdings Inc bankruptcy on Sept 15.

“I really don’t know how the unraveling finishes,” said Henry Asher, president of Northstar Group Inc in New York. “It looks like the government is forcing a controlled descent, without going the full monty as it did with Lehman.”

Shareholders are showing little patience. In afternoon trading the bank’s shares were down $1.32, or 22.4 percent, to $4.58. They earlier hit their lowest level since the bank won the second government lifeline. Citigroup is part of the Dow Jones industrial average.

Citigroup spokesman Michael Hanretta declined to comment.

ABOUT-FACE FOR CEO

Getting rid of major assets marks an about-face for Chief Executive Vikram Pandit, who had wanted to shrink the bank while retaining large parts of the “financial supermarket” model promoted by Sanford “Sandy” Weill, who created Citigroup in a 1998 merger. Pandit turned 52 on Wednesday.

On Tuesday Citigroup announced plans to combine its Smith Barney brokerage and other units with Morgan Stanley’s wealth management unit. Morgan Stanley would pay $2.7 billion and take a 51 percent stake in the joint venture, with the ability to buy the rest after five years.

While the transaction would bolster Citigroup’s balance sheet and result in a $5.8 billion gain, the decline in the bank’s stock resembled the downdraft last November 17-21, the week before Citigroup got the second TARP infusion. Shares fell 60.4 percent that week, including 20 percent on Friday.

“We continue to be concerned that weakness in Citigroup’s share price may lead to lack of customer (or government) confidence,” Barclays Capital analyst Jason Goldberg wrote on Wednesday.

A drumbeat of analysts has questioned whether regulators or Citigroup itself will give Pandit time to finish the job.

“Regulators are concerned about the quality of the management that got us where we are in the banking industry,” said Nancy Bush, an independent banking analyst and managing member of NAB Research LLC. “At Citigroup, the government has far more influence than on any other bank in the industry, and that’s why there may be more force to bear there.”

OUT OF TIME?

Pandit became chief executive in December 2007 and inherited many problems from predecessor Charles Prince.

People walk past the Citigroup headquarters in New York, November 24, 2008. REUTERS/Brendan McDermid

The bank has reported $20.3 billion of net losses, and taken more than $64 billion of credit losses and writedowns, since Pandit took over.

Oppenheimer & Co analyst Meredith Whitney, who was earlier than most analysts in recognizing the bank’s problems, called the brokerage venture with Morgan Stanley merely “a way for Citigroup to raise cash” before releasing quarterly results. She expects further asset sales and spinoffs.

But in tight credit markets, Citigroup’s ability to spin off assets may be limited.

“We question where the buyers will come from, since few are both large enough and strong enough,” wrote David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller.

Trone rates Citigroup “in line,” while Whitney rates the bank “underperform.”

Critics have said Pandit, known from his days as a top Morgan Stanley executive as a brilliant but cautious leader, was not aggressive enough in tackling the morass that Citigroup’s $2 trillion-plus balance sheet had become.

“Many parts of Citigroup’s business are wonderful and will get through this,” Asher said. “But for Citigroup as a holding company, I don’t think so.”

Ten analysts who issued estimates in the last week forecast on average that Citigroup would report a fourth-quarter loss of 94 cents per share, according to Reuters Estimates.

The annual cost of protecting $10 million of Citigroup debt against default for five years rose to $410,000 on Wednesday from $265,000 on Tuesday, according to Phoenix Partners Group.