The US government will own more than one-third of Citigroup after the cash-strapped bank on Friday reached a deal with the administration and other investors for US $ 50 billion of equity capital.
The deal would not require injection of taxpayers' money into the struggling bank, but the bank's "tangible common equity" would rise from US$ 29.7 billion dollars to US$ 81 billion due to the government and other investors converting their preferred shares into common stock.
Besides the US administration, a Singapore government arm and Saudi Prince Alwalled Bin Talal are also among the investors who have agreed to the deal structured to keep afloat the global financial behemoth.
The government has already injected US$ 45 billion of fresh capital into Citigroup and holds about eight per cent equity, which would be increased to a maximum of 36 per cent following the conversion of preferential shares.
The Government of Singapore Investment Corp's stake would rise to 11 per cent.
Announcing the deal, the Treasury Department said in statement that Citigroup has also agreed to rejig its board so that it has a majority of new independent directors. Besides, Citigroup said that it would suspend dividend payouts on its preferred shares as also the common stock.
{{/usCountry}}Announcing the deal, the Treasury Department said in statement that Citigroup has also agreed to rejig its board so that it has a majority of new independent directors. Besides, Citigroup said that it would suspend dividend payouts on its preferred shares as also the common stock.
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