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Citi befriends Abu Dhabi
 Source: Mediascrape
Citigroup is getting a $7.5 billion cash infusion from the government of Abu Dhabi. The beleaguered financial institution has agreed to sell up to a 4.9 percent stake of itself as it copes with mounting losses caused by the subprime mess and the credit crunch. The company took a $6.8 billion write down in the third quarter and could face another $11 billion write down in the current quarter. For its part - the middle eastern state of Abu Dhabi gets a stake in one of the world's biggest financial firms. And with that comes influence, because you can't separate the financial from the political, says Boston University Professor James Post. SOUNDBITE: James Post, management professor, Boston University (ENGLISH) saying: "Clearly these are economic entities, but they are guided by the political hand of their nation's leaders and that makes the political economy a trickier landscape to navigate." Citigroup already has a large Middle Eastern shareholder. Saudi Prince Alwaleed bin Talal has a stake that was worth about $6 billion earlier this month. But the value of Citigroup has been rapidly diminishing. Shares of Citigroup are trading around $30 a share - a level not seen in about 5-years. Word of the cash infusion, however, is helping the stock recover. And that good-feeling is spreading to the broader market - as investors see an infusion of cash into the U.S. banking system as good thing - no matter where the cash comes from. Conway Gittens, Reuters
Rating: (0 ratings) Views: 12 Added: Nov 28, 2007
Category: Business
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