It's Happening - U.S. Talking With Citi (C) About Larger Stake
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It's happening:
According to late reports from the Wall Street Journal, Citigroup (NYSE: C) is talking with federal officials about a plan that could substantially expand the U.S. government's ownership in the battered bank.
Under the plan, the government could wind up owning as much as 40% of Citigroup's common stock. Citi executives are said to be looking for government ownership closer to 25%. The talks are ongoing and could fall apart.
No additional govenment capital would be injected into Citigroup under the new plan, at this point. Citi has already received $25 billion from the government in the original TARP capital injection in October, and then received another $20 billion in capital and FDIC protection against losses on billions in assets as its stock tumbled in November.
Some key details of the plan, like at what price the government's preferred stock will convert into common, haven't been resolved.
Bank of America (NYSE: BAC), the other large bank thought to be on the edge, said Sunday it isn't discussing a larger ownership stake for the government. Last week, amid a flurry of speculation, Bank of America said nationalization was not being discussed.
Besides Citigroup and Bank of America, other large U.S. banks are likely to trade volitile tomorrow on this news. Those include: Wells Fargo (NYSE: WFC), JP Morgan (NYSE: JPM), U.S. Bancorp (NYSE: USB),
Goldman Sachs (NYSE: MS) and Morgan Stanley (NYSE: MS).
According to late reports from the Wall Street Journal, Citigroup (NYSE: C) is talking with federal officials about a plan that could substantially expand the U.S. government's ownership in the battered bank.
Under the plan, the government could wind up owning as much as 40% of Citigroup's common stock. Citi executives are said to be looking for government ownership closer to 25%. The talks are ongoing and could fall apart.
No additional govenment capital would be injected into Citigroup under the new plan, at this point. Citi has already received $25 billion from the government in the original TARP capital injection in October, and then received another $20 billion in capital and FDIC protection against losses on billions in assets as its stock tumbled in November.
Some key details of the plan, like at what price the government's preferred stock will convert into common, haven't been resolved.
Bank of America (NYSE: BAC), the other large bank thought to be on the edge, said Sunday it isn't discussing a larger ownership stake for the government. Last week, amid a flurry of speculation, Bank of America said nationalization was not being discussed.
Besides Citigroup and Bank of America, other large U.S. banks are likely to trade volitile tomorrow on this news. Those include: Wells Fargo (NYSE: WFC), JP Morgan (NYSE: JPM), U.S. Bancorp (NYSE: USB),
Goldman Sachs (NYSE: MS) and Morgan Stanley (NYSE: MS).
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