Filed under: Deals, Bad news, Citigroup Inc. (C)
Citigroup (NYSE: C) may need more cash. The head of Dubai International Capital told Reuters that it would take “a lot more money” to rescue Citigroup following investments from Abu Dhabi, Kuwait and Saudi Arabia’s Prince Alwaleed.
The statement has the benefit of probably being true. Citi is nearly certainly faced with more subprime losses and its derivative holdings of credit cards and munis plus LBO paper could lead the bank to have to write-off billions more in losses from these.
The question is where will the large bank go. Sovereign funds might not have an appetite for putting up more capital. US private equity firms might find the deal too risky. Things may get bad enough that the Fed will have to step in and give Citi a large loan to keep its balance sheet solid enough for the bank to remain solvent.
The “a lot more money” might come from taxpayers.
Douglas A. McIntyre is an editor at 247wallst.com
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