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Citigroup Inc. Message Board

  • bluecheese4u bluecheese4u Jan 10, 2008 5:51 AM Flag

    Citigroup Gains on WSJ Report of Foreign Investment

    Citigroup Gains on WSJ Report of Foreign Investment

    By Chia-Peck Wong

    Jan. 10 (Bloomberg) -- Citigroup Inc. rose in Germany and Japan after the Wall Street Journal reported that the biggest U.S. bank is seeking as much as $10 billion from foreign investors as mortgage-related losses deepen.

    Merrill Lynch & Co., the largest brokerage, also is in talks with investors and may get $3 billion to $4 billion, the Journal said earlier today, without citing any sources. Citigroup has already received about $7.5 billion from Abu Dhabi and Merrill said last month that it's raising as much as $6.2 billion from Singapore's Temasek Holdings Pte. and New York-based money manager Davis Selected Advisors LP.

    Banks and securities firms in the U.S. and Europe have turned to Asian and Middle Eastern governments for about $34 billion to prop up balance sheets battered by writedowns from the collapse of the U.S. subprime market. New York-based Citigroup and Merrill want to secure additional financing before they report the extent of their fourth-quarter losses next week, the Journal reported.

    ``The subprime situation has not been resolved and banks are looking to strengthen their capital in order to weather through this storm,'' said Arthur Lau, who helps manage $50 billion at JF Asset Management Ltd. in Hong Kong.

    Citigroup gained 5 cents to $27.54 in German trading and 64 cents to $28.13 in Japan, while Merrill fell 7 cents to $50.41 in Germany.

    Richard Tesvich, a Citigroup spokesman in Hong Kong, and Merrill spokesman Rob Stewart declined to comment.

    Fourth-Quarter Writedowns

    Citigroup may post $18.7 billion of fourth-quarter writedowns for mortgages and bad loans and cut its dividend by 40 percent, while Merrill may report $11.5 billion of writedowns, according to Goldman Sachs Group Inc. analyst William Tanona. Citigroup and Merrill lost almost 50 percent of their market value in the past 12 months and the companies replaced their chief executive officers.

    ``When more investors or value investors are taking the opportunity to invest in U.S. banks, one may guess the situation could hopefully bottom out soon because they see value to invest at this level,'' Lau said.

    State-controlled China Investment Corp. is buying an almost 10 percent stake in Morgan Stanley for $5 billion after the second-biggest U.S. securities firm reported a fourth-quarter loss of $9.4 billion from mortgage-related holdings. Zurich-based UBS AG and Bear Stearns Cos. also received sovereign money after bad investments depressed profits. Morgan Stanley and Bear Stearns are based in New York.

    Investment From Singapore?

    UBS, the biggest Swiss bank, replenished its capital last month with 13 billion Swiss francs ($11.6 billion) from the Government of Singapore Investment Corp. and an unidentified Middle Eastern investor by selling them bonds that convert into shares. Bear Stearns, the No. 5 U.S. securities firm by market value, moved to shore up investor support in October by selling a stake to China's government-controlled Citic Securities Co.

    Citigroup may receive additional funds from Singapore's GIC, the Journal reported. GIC was an investor in Old Lane LP, the hedge fund company founded by Citigroup Chief Executive Officer Vikram Pandit. Jennifer Lewis, a spokeswoman for GIC, said the company can only comment on ``transactions that GIC has done.'' The Journal said the investments from overseas may attract scrutiny from U.S. lawmakers.

    Dodd and SEC

    New York Senator Charles Schumer supported

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