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WEDNESDAY, NOVEMBER 25, 2009
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US to Take 36% Stake in Citi

Treasury will take up to 40% of bank in return for boardroom overhaul

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(Newser) – Citigroup and the federal government have reached a deal to boost the US stake in the bank to up to 40%, the parties announced this morning. The deal gives shareholders more protection, but in return, agrees to a Treasury Department demand for an overhaul of the embattled bank's board of directors. The new board will include a majority of independent directors; CEO Vikram Pandit is expected to keep his job, the Wall Street Journal reports.

Treasury officials have agreed to convert some of the government holdings of the bank's preferred shares into riskier common stock, but only to the extent that Citigroup can persuade private investors to do the same. Treasury will match private investors' conversions up to $25 billion. Despite the deal, Citi will still have to undergo the same government-established "stress tests" as other major banks to help judge its continued viability.

Traders work at the post that handles Citigroup at the New York Stock Exchange. A new deal with Citi will see the government's stake converted into common stock at a price yet to be determined.
Traders work at the post that handles Citigroup at the New York Stock Exchange. A new deal with Citi will see the government's stake converted into common stock at a price yet to be determined.   (AP Photo/Richard Drew)
In this Nov. 25, 2008 file photo, a customer exits a Citibank branch in New York.
In this Nov. 25, 2008 file photo, a customer exits a Citibank branch in New York.   (AP Photo/Craig Ruttle, file)
A man walks past Citigroup center location at Lexington Ave on Friday, Nov .21, 2008 in New York.
A man walks past Citigroup center location at Lexington Ave on Friday, Nov .21, 2008 in New York.   (AP Photo/Jin Lee)
Citigroup Chief Executive Officer Vikram Pandit testifies on Capitol Hill in Washington earlier this month before the House Financial Services Committee.
Citigroup Chief Executive Officer Vikram Pandit testifies on Capitol Hill in Washington earlier this month before the House Financial Services Committee.   (AP Photo/Haraz N. Ghanbari)
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1 comment
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Toon
Feb 27, 09 9:02 AM CST
I'd be nice if the new board did some real oversight. A friend of mine was told to keep her report to a board of directors short and simple because they didn't want to do a lot of reading. Directors make a lot of money to attend a few meetings a year and too many of them want to put in as little effort as possible. Reply
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