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