Freddie Mac, the US government-sponsored mortgage company, is to slash its dividend by half and raise $6bn (£3bn) through the sale of preferred stock to shore up its capital base. Financial Times

The move means Freddie is the second large financial institution in as many days to call on new capital to strengthen its balance sheet. Citigroup on Monday announced it had raised $7.5bn in fresh capital from the Abu Dhabi Investment Authority.

Freddie Mac’s board declared a dividend of 25 cents for the fourth quarter, compared with 50 cents in the third quarter. The company said it needed the $6bn of new capital and the dividend cut – its first since it became a public company in 1989 – to hold on to enough cash to maintain its financial flexibility and to satisfy regulators.

Last week the company warned it would need new capital as it revealed a $2bn third quarter loss, its largest yet, after rising defaults and credit losses on the mortgages it holds.