Citigroup approaches U.S. government for bigger stake
Tuesday, 24 February 2009, 01:16 IST
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New York: Troubled American financial giant Citigroup is in talks with the U.S. government for it to take a larger stake in the company, the Wall Street Journal (WSJ) reported Monday. The bank, one of the largest financial institutions in the world, received a government cash injection of $45 billion last year, but is now seeking more state assistance in return for between 25 percent and 40 percent of the firm, the paper cited bank insiders as saying. The WSJ reported that the Obama administration had yet to indicate whether it approved the plan, amid increasing speculation about the complete nationalization of various US banks in the wake of the global economic crisis. The government already owns 80 percent of insurer American International Group (AIG) after a bail-out last September. It currently holds nearly 8 percent of Citigroup in so-called preferred shares in return for its $45 billion cash injection. These could be converted into common stock but with greater voting rights with little further cost to the taxpayer. Last week Citigroup's share price fell to an 18-year low. The WSJ claims bank insiders would prefer state ownership to amount only to about 25 percent of the company. Bank of America, another US bank at the center of partial- nationalization speculation, said Sunday it was not in talks with the government over ownership issues, the paper reported. The turmoil on Wall Street in the wake of the biggest financial meltdown in decades last year saw Lehman Brothers go bankrupt, but bail-outs for other groups, such as Citibank.
Source: IANS