Citi Finds Helping Hand

The bank gets a needed $7.5 billion cash transfusion from an Arab investing arm.
Author:
Publish date:

Citigroup (C) - Get Report will receive a $7.5 billion cash infusion after agreeing to sell a stake to a funding arm of the Abu Dhabi government.

The New York bank said late Monday that equity-unit stake, which will convert into common shares, would limit the Abu Dhabi Investment Authority's stake to no more than 4.9% of outstanding Citigroup shares.

"This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business," said Win Bischoff, the company's acting CEO.

The Abu Dhabi fund has agreed not to own more than a 4.9% stake in Citi, and will have no special rights of ownership or control and no role in the management or governance of the company, including no right to designate a member of the board, Citigroup said.

The deal by Citigroup marks a move for stability after multi-billion writedowns related to the company's exposure to mortgage-based financial products and other leveraged debt rocked the stock.

Citigroup's woes ultimately cost former CEO Chuck Prince his job; he left the company earlier this month.

Earlier Monday, CNBC reported the company was considering a massive layoff of up to 45,000 employees to offset the financial crush, but the company didn't address such plans in its release regarding the Abu Dhabi deal.

Citigroup shares closed Monday off $1 to $30.70. The company's shares had traded near $50 until about six weeks ago.

For the United Arab Emirates, the Citigroup investment reflects the third such transaction involving a major company in the past two weeks for the oil-rich federation. On Monday, an investment company owned by Dubai's ruler bought a stake in Japan-based

Sony

(SNE) - Get Report

that was similarly thought to be under the 5% financial reporting threshold.

Earlier this month, another Abu Dhabi investment vehicle bought an 8.1% stake in

Advanced Micro Devices

(AMD) - Get Report

for $622 million.