Abu Dhabi Bails Out Citigroup With $7.5B Deal

Cash infusion for 4.9% stake will make it Citi's largest shareholder
By Jim O'Neill,  Newser Staff
Posted Nov 27, 2007 6:53 AM CST

(Newser) – 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.

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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. (Read more Citigroup stories.)

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