The Citibank loss and recapitalization posting did not really come as a surprise , the rescue operation included Alwaleed bin Talal bin Abdulaziz Alsaud which did not surprise either. He is doing this as a private individual and not through the Kingdom Holding. Since he almost single handedly rescued Citibank in the 90ies he is the largest individual shareholder in Citibank and even after he got treated rather shabbily when the regulators did not allow him to go over 5%, he never forgot that it was a Citibank managed entity which gave him the money to start his enterprise. It will be interesting to see if the US regulators still force Citibank to go back to special handling of accounts to rectify the restrictions in shareholding in US banks or if the big bank will serve as an example to allow foreigners a bigger share in US banks without a fuzz. The arguments are certainly there but with the phobias in the US against foreign influence (never mind that all the other countries should not have them) all bets are open.
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Citigroup has reported a $9.8 billion loss for the fourth quarter after taking a $17.4 billion writedown on subprime mortgage assets and reducing its subprime exposure from $54.6 billion in the third quarter to $37.3 billion.
Citi Raises $12.5B in Capital
Citi also announced the raising of $12.5 billion of capital via the sale of convertible preferred securities, including a $6.9 billion investment by the Government of Singapore Investment Corp.
Citi Directors Challenged on Mortgage Risk
Meanwhile, the CtW Investment Group is calling on five Citigroup directors to "describe the actions they took" to protect shareholders from excessive exposure to mortgage risk over the past two years.
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Today it will be coming more "bad" news after Citi and "Intel" writedowns. J.P. Morgan is the first one following by Merrill Lynch and ending with "bad" US economic facts.
Investing in "Bull" Positions at the Stock Market is impossible in the moment. There is no any positive news and Dow Jones Indice will be following down to 12.000 until the FED will confirm to cut the Interest Rate at least at 0.50 Basis Points on 30th January 2007.
Gold Price will be increase because Investors are looking for a secure "Harbour". Experts and prognostics for Gold Price in the next 2 months is by 1.000 USD/Ounze and there is no any "news" to stop the increasing. Maybe Price will be falling a little bit because of "overbought" and Investors are "charging" profits by selling their Positions but at this time there is a good oppertunity to buy Bull Positions.
Feedbacks and Comments are very welcome.
TW
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Anyone seen the article in the Washington Post on foreigners gobbling up US financial institution equity? The call of the politicians to restrict and their fear of use of such equity in the political arena?
Beside the usual xenophobia and the application of the usual rhetoric its again measuring the world on a different yard stick than they apply for US entities. Nothing new there.
I believe the reference to UBS is not really fair. The Swiss while having similar restrictive procedures as the US, apply them in a more open and relaxed fashion. If someone takes the risk through equity then he is allowed the influence, if they do not like it they find an internal solution and fund it themselves.
What is annoying is thats it the old sales trick all over again, you sell something bad by telling its perfect and just what is needed and then after things go south you go on selling a solution for it, never mind you complain when these chickens come to roust.
Anyway, is it just me who is offended? Fortunately we have not been hit by the subprime nor the other related products, it has made us some money and since the market is awash of money looking for a new solution, its actually good for us, the problem is just to use all the worthless Dollars which pour in. Buying banks in the US? no thank you!
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