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**QvhhbjLy** · 11-24-2008, 08:08 AM

here is the deal

http://www.bloomberg.com/apps/news?p...VQ8&refer=home

Citigroup Inc., facing the threat of a breakup or sale, received $306 billion of U.S. government guarantees for troubled mortgages and toxic assets to stabilize the bank after its stock fell 60 percent last week.

Citigroup also will get a $20 billion cash injection from the Treasury Department, adding to the $25 billion the company received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend. Citigroup rose as much as 41 percent in German trading today.

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Terms of the asset guarantees mean Citigroup will cover the first $29 billion of pretax losses from the $306 billion pool, in addition to any reserves it already has set aside. After that, the government covers 90 percent of the losses, with Citigroup covering the other 10 percent from assets, including residential and commercial mortgages, leveraged loans and so-called structured investment vehicles.

Unlike the bailouts of insurer American International Group Inc. and mortgage companies Fannie Mae and Freddie Mac, no management changes were required and Pandit gets to keep his job, government officials said. The agreement does call for the government approving executive compensation.

306 billion covered, Citi covers the first 29bn, the gov picks up 90% of the bill after that... and gains on the upside if the company recovers which looks like some middle lane - decent deal for both sides, but also punishes more prudent competitors, as Citi gets out easy - assuming this is enough to take them trough the rough period.

Emerging markets exposure is not covered.
Citigroup remains vulnerable to losses on loans and securities outside the U.S., said Peter Kovalski, a portfolio manager at Alpine Woods Capital Investors LLC in Purchase, New York, which oversees $8 billion and holds Citigroup shares.

The government plan “gives them a little bit of breathing room, but longer term, things may deteriorate and losses increase,” said Kovalski. “The Achilles heel with Citi is their exposure to emerging markets and what’s going to happen when emerging markets turn down, as they’re doing now.”

11-24-2008, 08:08 AM	#12
QvhhbjLy Join Date Oct 2005 Posts 373 Senior Member	here is the deal http://www.bloomberg.com/apps/news?p...VQ8&refer=home Citigroup Inc., facing the threat of a breakup or sale, received $306 billion of U.S. government guarantees for troubled mortgages and toxic assets to stabilize the bank after its stock fell 60 percent last week. Citigroup also will get a $20 billion cash injection from the Treasury Department, adding to the $25 billion the company received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend. Citigroup rose as much as 41 percent in German trading today. . . . Terms of the asset guarantees mean Citigroup will cover the first $29 billion of pretax losses from the $306 billion pool, in addition to any reserves it already has set aside. After that, the government covers 90 percent of the losses, with Citigroup covering the other 10 percent from assets, including residential and commercial mortgages, leveraged loans and so-called structured investment vehicles. Unlike the bailouts of insurer American International Group Inc. and mortgage companies Fannie Mae and Freddie Mac, no management changes were required and Pandit gets to keep his job, government officials said. The agreement does call for the government approving executive compensation. 306 billion covered, Citi covers the first 29bn, the gov picks up 90% of the bill after that... and gains on the upside if the company recovers which looks like some middle lane - decent deal for both sides, but also punishes more prudent competitors, as Citi gets out easy - assuming this is enough to take them trough the rough period. Emerging markets exposure is not covered. Citigroup remains vulnerable to losses on loans and securities outside the U.S., said Peter Kovalski, a portfolio manager at Alpine Woods Capital Investors LLC in Purchase, New York, which oversees $8 billion and holds Citigroup shares. The government plan “gives them a little bit of breathing room, but longer term, things may deteriorate and losses increase,” said Kovalski. “The Achilles heel with Citi is their exposure to emerging markets and what’s going to happen when emerging markets turn down, as they’re doing now.”
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