Home > business, economy > Citi presses officials to take 40% stake

Citi presses officials to take 40% stake

Originally posted on FT

Citigroup is pressing the US government to agree on a new capital injection that would increase the authorities’ stake in the troubled bank to about 40 per cent but stop short of an outright nationalisation.

The talks come after Citi’s shares slumped last week as investors feared it would be nationalised. Citi insiders said they expected a decision on the company’s future in the coming weeks but warned that it would have to come earlier if its shares fell again in the next few days.

People close to the situation said Citi executives had been in discussions with regulators during at the weekend over a plan that would enable the government and other shareholders to convert up to $75bn of preferred shares into common stock.

According to its proponents, the injection of common stock would bolster Citi’s capital base while at the same time allaying market fears of a nationalisation. Under the plan, first revealed by the Financial Times last week, Citi could also try to raise fresh equity with a public share offering.

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