23 November 2008

Citigroup in Emergency Talks with Government for Cash

Here we are, behind financial lines, huddled over our shortwave radios, waiting to hear about the true state of of our economy from the BBC... LOL.

BBC News
Citigroup seeks 'emergency cash'
15:54 GMT, Sunday, 23 November 2008

Executives of Citigroup, one of the biggest banks in the US, are in emergency talks with the US Treasury to gain much-needed funding, reports say.

The bank is also said to have contacted certain shareholders to assess their interest in increasing their stakes as as it faces an uncertain future.

Citigroup stock ended 20% lower on Friday as its board members met.

Last week the company announced 52,000 job losses worldwide on top of 23,000 job cuts previously announced.

No one from Citigroup was immediately available for comment.

There are fears that without further funding the bank might not be able to survive. Any money would be in addition to the $25bn injection it received in October from the US Treasury.

Options being discussed included a government cash injection as well as Citigroup selling some of its business, reported The Sunday Times. (Remember you heard about all of this here first - Jesse)

Chief executive Vikram Pandit told employees on Friday that the firm did not want to change its business model, Reuters reported, citing two employees.

He also reiterated that the firm had a robust capital position. (That seems to be financial CEO-speak for "we are on the brink, mates, and its been good to know you "- Jesse)

But Sean Egan, analyst at ratings agency Egan-Jones Ratings, said, "Citigroup needs a deep-pocketed investor that is ready, willing, and able to step up in the next few days." (Prince Alwaleed has a hole in his pocket? - Jesse)

"The only one who comes to mind is the government," he said, adding that $50bn might ne needed. (ROFLMAO, you can't make this stuff up. Hmmm, I'm thinking of a bigger fool, and a bigger number.... - Jesse)

In a bid to reassure investors, Citigroup is running advertisements in US and international newspapers on Sunday underlining its stability. (NY global bank with gaping holes in balance sheet desparately seeking a deep-pocketed investor 'just in case' we wish to re-open on Monday - Jesse)

It is widely expected that Citigroup will issue a statement on Monday before the US markets open. (They just said they had a robust cash position and that everything was fine. What are they going to say now, that they expect a cash surge from the Bush Administration to turn the tide? - Jesse)