Citigroup says US government stake to be up to 34 percent
Fri, May 08, 2009
AsiaOne
>NEW YORK, America - Citigroup unveiled a plan to shore up its capital base Thursday in the wake of the government's "stress tests" on banks, saying the moves would limit the US government stake in Citi to 34 percent.
The troubled bank, which had to turn to the Treasury to avert a meltdown in 2008 and again in 2009, said its moves would boost its capital position by increasing its exchange of preferred shares for common stock.
Citi said it would convert 33 billion dollars of preferred shares, or 5.5 billion dollars more than under a plan announced in February.
Regulators consider common stock a better source of capital than preferred shares, which require dividends to be paid.
"Based on the maximum eligible conversion, the US government would own approximately 34 percent of Citi's outstanding common stock and existing shareholders would own approximately 24 percent of the outstanding common shares."
The stress tests showed Citi needed an additional 5.5 billion dollars in capital to withstand a darker economic scenario. -AFP
