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Banks Seeking Cash Spur New Merger Round

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

By Nick McMaster, Newser Staff

Posted Nov 28, 2007 7:09 PM CST

(Newser) – An informal merger overture from Bank of America to cash-starved Citigroup was recently rejected, the Wall Street Journal reports, in favor of a smaller, $7.5 billion infusion from the Abu Dhabi government, approved by the bank today. But the offer, quickly disavowed by BoA, underscores the fact that a new round of opportunistic deals may be in the making as more and more financial firms are forced to replenish their capital reserves.

"It's a bitter pill to swallow to admit that the problems in the market have reached the point that companies that traditionally could fund themselves now need external sources of capital,” one investment banker said. A Citigroup merger with BoA would solve liquidity and leadership issues but is viewed unfavorably because it might make the already unwieldy financial giant ungovernable.

A Bank of America branch is shown in Miami, Florida in this April 23, 2007 file photo. (Getty Images)

A Citibank office is shown on Tuesday, Nov. 27, 2007 in New York. The Abu Dhabi Investment Authority will invest $7.5 billion in Citigroup, offering the nation's largest bank needed capital to offset... (Associated Press)

People pass a Citibank office on Tuesday, Nov. 27, 2007 in New York. The Abu Dhabi Investment Authority will invest $7.5 billion in Citigroup, offering the nation's largest bank needed capital to offset... (Associated Press)

Charles Prince, former CEO of Citigroup, speaks at a press conference in New York, in this April 7, 2004 file photo. (AP Photo/Diane Bondareff, File) (Associated Press)

Former Citigroup CEO and chairman Charles Prince pauses before speaking during the 'Town Hall Meeting' at the World Economic Forum in Davos, Switzerland, in this Jan. 26, 2005 file photo. (AP Photo/Virginia... (Associated Press)

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Banks Seeking Cash Spur New Merger Round

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

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Banks Seeking Cash Spur New Merger Round

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

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OTHER STORIES ON OUR RADAR

Citigroup • Bank of America • subprime mortgages • Abu Dhabi • liquidity

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

10 Banks Form $70B Fund to Stave Off Crash

Paulson brokers twin public-private liquidity measures

For Hurting US Companies, World Supplies Band-Aid

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

Banks Scuttle SIV Bailout

BoA, Citi and JP Morgan drop subprime fix over lack of interest

Abu Dhabi Bails Out Citigroup With $7.5B Deal

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

Banks to Form $100B Fund to Back Mortgage Securities

Critics say plan is unnecessary, only helps Citigroup

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