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.