Saudi, Kuwaiti and Chinese Cash Infusions to Save Citigroup
January 13th, 2008Via: Bloomberg:
Citigroup Inc., the U.S. bank facing an estimated $4.21 billion fourth-quarter loss, may get cash infusions from Saudi Prince Alwaleed bin Talal and China’s government to bolster its capital.
Citigroup, the largest U.S. lender, is seeking a total of $8 billion to $10 billion from investors including Alwaleed, who already owns almost 4 percent of its shares, and China Development Bank, the Wall Street Journal reported yesterday, citing people familiar with the matter. The Chinese bank is likely to invest about $2 billion, the newspaper said.
Separately, the Financial Times today reported that Citigroup may raise as much as $14 billion, including $9 billion from China and $1 billion from the Kuwaiti Investment Authority. A public placement of shares would add another $2 billion to $4 billion, the newspaper said.
Subprime mortgage losses have drained the capital Citigroup keeps as a cushion against bad loans, forcing it to try to sell equity for the second time in two months. The New York-based bank raised $7.5 billion from the ruling family of Middle Eastern emirate Abu Dhabi in December, joining Merrill Lynch & Co., Morgan Stanley and UBS AG in seeking infusions from overseas investors.
“I don’t remember a time in history when so many banks were running around the world with hats in hand,” said Richard Sylla, a financial history professor at New York University’s Stern School of Business.
Citigroup spokesman Michael Hanretta declined to comment. Heba Fatani, a spokeswoman for Alwaleed’s holding company, didn’t respond to an e-mail seeking comment.
