Citicorp, the nation's largest banking company, announced yesterday that it will eliminate 8,000 jobs, sharply cut dividend payments to shareholders and increase its reserves to cover mounting losses from soured real estate deals and other problem loans.

Citicorp also announced that it will suffer a loss of between $300 million and $400 million in the last three months of the year after it sets aside an additional $340 million for bad loans. The bank said it will still earn a profit for the year as a whole.

The cutback at New York-based Citicorp comes at the end of one of the worst years for American banks since the Great Depression. It follows a week of intense congressional scrutiny on the severity of the banking industry's problems and whether money may be needed from taxpayers to replenish the nation's dwindling bank insurance fund -- something the Bush administration says is not necessary.

Citicorp, parent of Citibank, acted in response to months of pressure from Wall Street and regulators to trim costs and recognize the need to set aside more money to cover bad loans. Similar steps have been taken in recent months by several major banks -- including Chase Manhattan of New York, Security Pacific of Los Angeles and the biggest banking company in the Washington area, MNC Financial Inc. All have been battered by falling real estate prices and a slumping economy.

Banking analysts generally applauded Citicorp's steps but warned that the company will have to do even more to weather the current economic downturn.

"We view this as a dramatic step that is necessary to deal with today's banking problems," said Donald Crowley, assistant director of research at Keefe, Bruyette & Woods Inc., a New York-based bank securities firm. "We've been waiting for them to take dramatic action."

Several banking specialists said they were surprised by how little Citicorp added to its reserves, considering its large pool of loans for which payments are behind schedule. In all likelihood, the analysts said, Citicorp will need to set aside more money to cover bad loans in the United States and abroad.

"Citicorp's problems are not insurmountable, but they haven't been resolved yet," said Mark Alpert, a managing director and banking analyst at Bear Stearns & Co., a New York securities firm. "Reserves {at Citicorp} are still the lowest of any major bank, so they still need reserves, {and} there's no reason to believe that nonperforming loans have peaked," Alpert said, referring to loans that are not earning interest.

Citicorp said the cost-cutting program would result in annual savings of $800 million. It said that 3,600 of the projected job cuts have already been made in 1990, and the remaining 4,400 jobs will be eliminated over the next two years. In all, one in every 11 jobs will be eliminated.

A Citicorp spokesman would not disclose specifically where the staff cuts would occur. While they probably would be spread throughout the bank's operations, he said, they would be more likely to affect commercial operations than the company's profitable consumer divisions. The company employed 92,000 people in more than 40 states at the end of 1989.

Citicorp has several major consumer divisions in the Washington and Baltimore areas, and it employs several thousand people in the region. Its operations include a major credit card processing center in Hagerstown, Md.; a bank in Maryland; and a savings and loan in the District. Because these are consumer operations, they are not expected to be hard hit by the layoffs, a spokesman said.

The job cuts will result in a one-time cost of about $300 million, which will put a drag on fourth-quarter earnings but still allow the bank to report a profit for all of 1990 of between $400 million and $500 million.

Citicorp's latest woes are the result primarily of losses on loans to commercial real estate ventures that have gone bad in the current economic downturn. The New York-based bank has been hit particularly hard because of the acute real estate problems in the Northeast.

In addition, like other big banking firms, Citicorp has suffered significant losses on loans used to finance buyouts of large companies and to Third World countries.

The cost-cutting measures -- especially the dividend cut -- appeared to be the direct result of pressure from federal banking regulators, who recently completed an examination of Citibank's assets, industry analysts said.

While a final decision will be made only next month, the company said after a board meeting that it expects to slash the payout by 44 percent, from an annual rate of $1.78 to $1 per share.

Citicorp Chairman John Reed has been a staunch opponent of cutting the dividend, arguing that the best way for a bank to raise capital is to attract investors in part by offering an attractive dividend. But the federal government recently has applied heavy pressure on banks to slash dividend payments when they are experiencing losses or making sizable additions to reserves against loan losses.

In another area of contention between Citicorp and regulators, the company appeared to have enjoyed some success in holding down the size of its increase in loan-loss reserves, or the amount of money set aside to cover losses from nonperforming assets, analysts said.

Reid Nagle, an analyst at SNL Securities L.P., a banking research and publishing firm in Charlottesville, said Citicorp would have had to set aside a "substantially larger" reserve than $340 million if the regulators had forced it to adhere to the same guidelines as those enforced for the rest of the banking industry. Nagle said the regulators probably were relatively tolerant of Citibank's condition in part because they were worried about fueling fears about the stability of the banking system.

McCartney contributed to this report from New York.

ANNOUNCED SINCE JAN. 1

BANK...................LOCATION...TOTAL CUTS

Citicorp................New York......8,000

Bankof New England......Boston........5,600

Chase Manhattan.........New York......5,000

Bank of Boston..........Boston........1,500

Manufacturers Hanover...New York......1,400

Chemical Banking........New York......1,100

Continental Bank........Chicago....... 900

SOURCES: Washington Post News Research and American Banker