Citigroup receives $20bn of US Treasury support

by Gill Montia

Story link: Citigroup receives $20bn of US Treasury support

The US Government has agreed a $20 billion (£13.3 billion) injection of cash into Citigroup, after the banking group saw its share price fall 60% last week.

The rescue plan, which has been described as radical and complex, also involves the US Treasury guaranteeing loans and securities.

Around $306 billion of real estate loans (largely commercial and residential mortgages) and other assets will remain on the bank’s balance sheet with Citigroup responsible the first $29 billion of any losses, beyond that 90% of any losses will be absorbed by the US Government.

In return the US taxpayer will receive $20 billion in preference shares plus undertakings regarding executive pay, help for homeowners facing repossession and dividends.

The money will come from the US Government’s $700 billion bank bailout fund, which has already propped the group up to the tune of $25 billion.

Citigroup recently announced that it would be cutting its global workforce by 52,000.

The job losses are in addition to the 23,000 announced earlier this year and redundancies are expected among its remaining 12,000 employees in the UK.