Abu Dhabi Bails Out Citigroup With $7.5B Deal

Cash infusion for 4.9% stake will make it Citi's largest shareholder
By Jim O'Neill,  Newser Staff
Posted Nov 27, 2007 6:53 AM CST
Abu Dhabi Bails Out Citigroup With $7.5B Deal
The Citigroup Center is shown on Monday, Nov. 5, 2007 in New York. Stocks fell but regained some ground Monday as a stronger-than-expected reading on the service economy mitigated concerns about soured debt that sprang from news of more Citigroup Inc. write-downs. (AP Photo/Mark Lennihan)   (Associated Press)

Staggered by the weight of subprime mortgage losses and with its stock trading at its lowest level since 2002, embattled Citigroup last night announced a $7.5 billion cash infusion from the government of Abu Dhabi, the Wall Street Journal reports. The deal strengthens Citi’s capital base and investor confidence as it faces up to $11 billion more in fourth-quarter losses.

Citi is paying more for the cash than it would in the junk-bond market, highlighting the bank's desperate position. Citigroup's shares have fallen 46%, for a loss of $129 billion of market value; it traded at $29.75 yesterday, a price one analyst said was “100% based on fear." The Abu Dhabi news helped the stock rebound in early trading overseas. (More Citigroup stories.)

Get the news faster.
Tap to install our app.
X
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.

X