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SATURDAY, NOVEMBER 21, 2009
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China May Scuttle $2B Citigroup Bailout

Sources say China's government is standing in the way of the deal

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(Newser) – On the eve of Citigroup’s fourth-quarter earnings announcement, the Chinese government appears to have raised objections to China Development Bank's purchase of a $2 billion stake in the struggling financial giant, reports the Wall Street Journal. The proposed deal, reported by the Journal over the weekend, is part of an $8-billion to $10-billion infusion Citi has been trying to put together from a number of foreign investors.

Citi hopes to offset its earning report tomorrow—expected to contain a large dose of additional subprime writeoffs—with news of a lifeline from these investors to stabilize its capital base. US banks have looked to China several times for bailouts, most recently a $5-billion investment in Morgan Stanley by China Investment Corp.

Citigroup Inc. provided this file photo Vikram Pandit. The ascension of Indian-born leaders like Pandit, the new CEO of Citigroup Inc., tracks the economic rise of their home country, once seen by U.S. business as a large market or a source of low-cost technology workers, now viewed as a...
Citigroup Inc. provided this file photo Vikram Pandit. The ascension of Indian-born leaders like Pandit, the new CEO of Citigroup Inc., tracks the economic rise of their home country, once seen by U.S....   (Associated Press)
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 big losses from mortgages and other investments. (AP Photo/Mark Lennihan)
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)
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 debt that sprang from news of more Citigroup Inc. write-downs. (AP Photo/Mark Lennihan)
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)
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