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Citigroup Inc. has concluded an agreement with the U.S. Treasury, the Federal Reserve Council and the FDIC upon a number of measures intended to consolidate the bank, reduce risks and increase its liquidity, following a major investor confidence crisis, which reduced the bank"s market value to half in only three days. Within the Troubled Assets Relief Program, the U.S. Treasury will invest 20 billion USD in preferential shares in Citigroup and receive a return of 8%. The U.S. Government will receive preferential shares worth 27 billion USD and guarantee Citigroup bad assets worth 306 billion USD. The list of assets consists mainly of property and loans and commitments backed by residential property.
Based on such guarantee, Citigroup will undertake gross losses of up to 29 billion USD out of the 306 billion USD portfolio. Any loss exceeding this amount will be 90% undertaken by the U.S. Government. The management of Citigroup accepted not to pay dividends for common shares in excess of 0.01 USD/share for three years. Citigroup CEO Vikram Pandit said the solution would consolidate capital indicators, reduce risks and increase the bank"s liquidity. He further said that the bank appreciated the U.S. Government"s huge effort to maintain market stability. Citigroup is present in Romania through Citigroup Romania SA and its consumer lending arm, CitiFinancial.
THE U.S. TREASURY GAVE CITIGROUP A 25 BILLION USD CAPITAL INJECTION IN OCTOBER.
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