"Citigroup gets $20bn bail out
By Greg Farrell in New York
Published: November 24 2008 05:14 | Last updated: November 24 2008 05:26
The US government rode to the rescue of Citigroup late Sunday, entering an agreement to backstop up to $306bn in problematic assets and injecting $20bn in capital to restore confidence in a bank that defines the term “too big to fail.”
The 11th-hour transaction, announced just before midnight on Sunday, calls for Citi to absorb the first $29bn in losses it sustains from problematic assets, and for the federal government to stand behind as much as $277bn more.
The arrangement also provides for the injection of $20bn in new capital to Citi, in return for which the bank will issue preferred shares to the government, paying dividends at a rate of 8 per cent annually."
Not unexpected. Can everyone say implicit guarantee? Add problematic assets to our list.
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