The Hindu : Business : U.S. Govt may up stake in Citigroup

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Tuesday, Feb 24, 2009
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U.S. Govt may up stake in Citigroup

WASHINGTON: Financial major Citigroup is in talks with federal officials that may lead to the U.S. Government, extending its control over the struggling bank.

Quoting people familiar with the situation, the Wall Street Journal said, “Citigroup is in talks with federal officials that could result in the U.S. Government substantially expanding its ownership of the struggling bank.”

“While the discussions could fall apart, the Government could wind up holding as much as 40 per cent of Citigroup’s common stock. Bank executives hope the stake will be closer to 25 per cent,” the report added. The move came as Citigroup’s stocks dipped below $2, the lowest in 18 years. Its stocks have dropped a whopping 71 per cent this year.

The Government would convert a substantial chunk of the $45 billion in preferred shares into common stock, the report said.

The government had received those shares, aggregating a 7.8 per cent stake, in return for injecting $45 billion into Citigroup.

The move would not cost taxpayers additional money, but other Citigroup shareholders would see their stock diluted, the daily added. — PTI

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