Citigroup in Talks That May Raise Government’s Stake, WSJ Says
By Dave McCombs and Brett Miller
Feb. 23 (Bloomberg)
Citigroup Inc., the recipient of $45 billion in U.S. government aid, is in talks with federal officials that may increase state ownership of the bank, the Wall Street Journal said.
The government may end up holding as much as 40 percent of Citigroup’s common stock, the newspaper said, citing people familiar with the situation it didn’t identify.
Citigroup, which slumped 22 percent in New York trading Feb. 20 on concern it may be nationalized,
proposed to its regulators that the government convert a large portion of its preferred shares into common stock in a transaction that wouldn’t cost taxpayer more money, the Journal reported. Another taxpayer- funded bailout would probably cost Chief Executive Officer
Vikram Pandit his job, the report said.
Banks may have to be nationalized for “a short time” to help lenders such as
Citigroup and
Bank of America Corp. survive the worst economic slump in 75 years,
Senate Banking Committee Chairman
Christopher Dodd said on Feb. 20.
Citigroup, which is trading at its
lowest level in 18 years, would prefer the government stake in the New York-based company to be closer to 25 percent, the Journal said.
Bank of America and Citigroup have received a combined $90 billion in U.S. aid in four months.
The administration of President
Barack Obama said on Feb. 20 that a “privately held” banking system is the “correct way to go” and House Financial Services Committee Chairman
Barney Frank said nationalization ought “to be avoided.”
To contact the reporters on this story:
Brett Miller in Tokyo at
bmiller30@bloomberg.net;
Dave Mccombs in Tokyo at
dmccombs@bloomberg.net
Last Updated: February 22, 2009 21:20 EST
http://www.bloomberg.com/apps/news?p...lMg&refer=home
Citigroup in Talks That May Raise Government’s Stake
Threaded Mode