Abu Dhabi Bails Out Citigroup With $7.5B Deal

Cash infusion for 4.9% stake will make it Citi's largest shareholder

By Jim O'Neill, Newser User

Posted Nov 27, 2007 6:53 AM CST

(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.

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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Abu Dhabi Bails Out Citigroup With $7.5B Deal

Cash infusion for 4.9% stake will make it Citi's largest shareholder

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Abu Dhabi Bails Out Citigroup With $7.5B Deal

Cash infusion for 4.9% stake will make it Citi's largest shareholder

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OTHER STORIES ON OUR RADAR

Citigroup • subprime mortgages • Abu Dhabi

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

For Hurting US Companies, World Supplies Band-Aid

In economic sea change, 'we need the money,' one US Rep. says

Banks Seeking Cash Spur New Merger Round

Citigroup blows off BoA for Abu Dhabi, but it's just the beginning

Top Subprime Lenders Owned by Bailout Banks

Analysis of gov't data reveals sources of the economic meltdown

Spending Spree Puts Abu Dhabi Under Spotlight

After US grabs, officials focus on secretive sovereign wealth fund

Citi Blocks Hedge Fund Withdrawals

Move is latest black eye for bank's alternative investments

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Newser By Users

Community

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