The US government has made its biggest move yet to rescue an American bank. For Citigroup, it means a 15.5-billion euros capital injection – on top of 19.5-billion it has already been given – and an agreement the government will shoulder most of the potential losses lurking in 240-billion euros worth of high-risk assets. Citigroup shares immediately surged 55 per cent – but they had dropped 60 per cent in value last week.It was America’s second biggest bank – some analysts reckon it simply could not be allowed to crash – with more 1.5-trillion euros in assets and dealings in 100 countries it is just too big. Failure would mean a catastrophic ripple effect around the globe. The bank now has to try to tweak its high-risk mortgages, as the government tries to keep re-possessions down. Senior Citigroup bosses will keep their jobs, something one shareholder described as an inept management being rewarded by the US government.
Washington's biggest bank bail-out yet