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Abu Dhabi Bails Out Citigroup With $7.5B Deal

Posted Nov 27, 07 6:53 AM CST in Business 

(Newser) – Staggered by the weight of subprime mortgage losses and with its stock trading at its lowest level since 2002, embattled Citigroup last night announced a $7.5 billion cash infusion from the government of Abu Dhabi, the Wall Street Journal reports. The deal strengthens Citi’s capital base and investor confidence as it faces up to $11 billion more in fourth-quarter losses.

Citi is paying more for the cash than it would in the junk-bond market, highlighting the bank's desperate position. Citigroup's shares have fallen 46%, for a loss of $129 billion of market value; it traded at $29.75 yesterday, a price one analyst said was “100% based on fear." The Abu Dhabi news helped the stock rebound in early trading overseas.

Sources Wall Street Journal , Reuters, Bloomberg

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The Citigroup Center is shown on Monday, Nov. 5, 2007 in New York. Stocks fell but regained some ground Monday as a stronger-than-expected reading on the service economy mitigated concerns about soured...   (Associated Press)
The Citibank logo is shown on a branch office in this April 11, 2007 file photo in New York. Citigroup Inc. said Monday, Oct. 15 its third-quarter profit dropped 57 percent after the biggest U.S. bank...   (Associated Press)
Pedestrians pass a Citibank branch office in this Monday, Nov. 5, 2007 file photo, in Chicago. Citigroup Inc. said late Monday, Nov. 26, 2007 that it has reached an agreement to sell equity units with...   (Associated Press)
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