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| Citigroup shares jump on bail-out | Citigroup shares jump on bail-out |
| (4 days later) | |
| Shares in Citigroup have jumped by almost 60% as investors welcomed the US government's rescue plan for the bank. | Shares in Citigroup have jumped by almost 60% as investors welcomed the US government's rescue plan for the bank. |
| The US Treasury is set to invest $20bn (£13.4bn) in return for preferred shares in the troubled banking giant. | The US Treasury is set to invest $20bn (£13.4bn) in return for preferred shares in the troubled banking giant. |
| The Treasury and the Federal Deposit Insurance Corp will also guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books. | The Treasury and the Federal Deposit Insurance Corp will also guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books. |
| "Equity markets have responded positively to the Citigroup news," said Neil Mackinnon at ECU Group. | "Equity markets have responded positively to the Citigroup news," said Neil Mackinnon at ECU Group. |
| The new plan follows a $25bn injection of public funds in the bank last month. | The new plan follows a $25bn injection of public funds in the bank last month. |
| Citigroup's market value fell to $20.5bn on Friday, compared with $270bn in 2006, as its shares plunged by more than 60% last week. | Citigroup's market value fell to $20.5bn on Friday, compared with $270bn in 2006, as its shares plunged by more than 60% last week. |
| However they rallied by 58% on Monday. | However they rallied by 58% on Monday. |
| The company has announced 52,000 job losses worldwide, on top of 23,000 job cuts previously announced. It employs around 12,000 people in the UK. | The company has announced 52,000 job losses worldwide, on top of 23,000 job cuts previously announced. It employs around 12,000 people in the UK. |
| CITIGROUP Citibank was founded in 1812 in New YorkIt has 200 million customer accounts It operates in 100 countries Source:Citigroup | CITIGROUP Citibank was founded in 1812 in New YorkIt has 200 million customer accounts It operates in 100 countries Source:Citigroup |
| Citigroup has lost more than $20bn in the past year because of the global financial crisis, suffering four straight quarterly losses. | Citigroup has lost more than $20bn in the past year because of the global financial crisis, suffering four straight quarterly losses. |
| Citibank UK deposit holders are covered by the Financial Services Authority. The Financial Services Compensation Scheme guarantees up to £50,000 per Citibank account holder, should the bank go bust. | Citibank UK deposit holders are covered by the Financial Services Authority. The Financial Services Compensation Scheme guarantees up to £50,000 per Citibank account holder, should the bank go bust. |
| 'Protecting taxpayers' | 'Protecting taxpayers' |
| The action plan was announced after emergency talks over the weekend between the bank and the treasury department, the Federal Reserve and the Federal Deposit Insurance Corp. | The action plan was announced after emergency talks over the weekend between the bank and the treasury department, the Federal Reserve and the Federal Deposit Insurance Corp. |
| We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks Federal statement | We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks Federal statement |
| Citigroup is one of the leading US banks and has operations in more than 100 countries. | Citigroup is one of the leading US banks and has operations in more than 100 countries. |
| Many analysts had calculated that the huge financial institution was too big to allow to fail. | Many analysts had calculated that the huge financial institution was too big to allow to fail. |
| "With these transactions, the US government is taking the actions necessary to strengthen the financial system and protect US taxpayers and the US economy," the three agencies said in a statement. | "With these transactions, the US government is taking the actions necessary to strengthen the financial system and protect US taxpayers and the US economy," the three agencies said in a statement. |
| "To stabilize the equity, we had to put behind us the issue of Citigroup's ability to withstand whatever would come," the bank's chief financial officer Gary Crittenden said. | "To stabilize the equity, we had to put behind us the issue of Citigroup's ability to withstand whatever would come," the bank's chief financial officer Gary Crittenden said. |
| The cash injection will come from the $700bn financial bail-out fund created last month. | The cash injection will come from the $700bn financial bail-out fund created last month. |
| Focus on details | Focus on details |
| Many analysts believe the plan to rescue Citigroup will help reduce uncertainty in the market. | Many analysts believe the plan to rescue Citigroup will help reduce uncertainty in the market. |
| "We expect the US bail-out of Citigroup as well as Obama's promise of a major stimulus plan - with key Democrats suggesting numbers between $500bn and $700bn, much bigger than expected - to allow stock markets to gain across the globe, " said Dariusz Kowalczyk at CFC Seymour in Hong Kong. | "We expect the US bail-out of Citigroup as well as Obama's promise of a major stimulus plan - with key Democrats suggesting numbers between $500bn and $700bn, much bigger than expected - to allow stock markets to gain across the globe, " said Dariusz Kowalczyk at CFC Seymour in Hong Kong. |
| This proudest of US banks has been humbled: the rescue is about as close to nationalisation as it's possible to get without the state taking 100% ownership. Robert Peston BBC Business editor Read Robert Peston's blog | This proudest of US banks has been humbled: the rescue is about as close to nationalisation as it's possible to get without the state taking 100% ownership. Robert Peston BBC Business editor Read Robert Peston's blog |
| Markets are keenly awaiting for more details of the plan to be revealed. | Markets are keenly awaiting for more details of the plan to be revealed. |
| "Clearly, this will stabilize the [banking] group near term," said Meredith Whitney at Oppenheimer & Co. | "Clearly, this will stabilize the [banking] group near term," said Meredith Whitney at Oppenheimer & Co. |
| "We are still cautious on the potential future dilution from further prospective capital raises for the group as well as continued higher losses related to credit and asset deflation," he added. | "We are still cautious on the potential future dilution from further prospective capital raises for the group as well as continued higher losses related to credit and asset deflation," he added. |
| "Management's future | "Management's future |
| Under the agreement, Citigroup does not have to replace chief executive Vikram Pandit and other top managers, but the government will be able to make decisions on their compensation. | Under the agreement, Citigroup does not have to replace chief executive Vikram Pandit and other top managers, but the government will be able to make decisions on their compensation. |
| "We appreciate the tremendous effort by the government to assure market stability," Mr Pandit, who took the top job at Citigroup in January, said in a statement. | "We appreciate the tremendous effort by the government to assure market stability," Mr Pandit, who took the top job at Citigroup in January, said in a statement. |
| He has come under fire for failing to turn around the bank. | He has come under fire for failing to turn around the bank. |
| "You're seeing an inept management team being rewarded by the US government," said William Smith at Smith Asset Management in New York. | "You're seeing an inept management team being rewarded by the US government," said William Smith at Smith Asset Management in New York. |
| The bank will not be able to pay out more than 1 cent per share quarterly dividend. The dividend now stands at 16 cent per share. | The bank will not be able to pay out more than 1 cent per share quarterly dividend. The dividend now stands at 16 cent per share. |
| Seeking to stabilise the financial system, the US government has bailed out Bear Stearns, Fannie Mae, Freddie Mac and American International Group and injected hundreds of billions of dollars into financial institutions. | Seeking to stabilise the financial system, the US government has bailed out Bear Stearns, Fannie Mae, Freddie Mac and American International Group and injected hundreds of billions of dollars into financial institutions. |