Times Online, 24 Nov 2008, Tom Bawden and Suzy Jagger
Citigroup was last night in advanced discussions with the US Administration to create a “bad bank” to house about $50 billion (£33.4 billion) of its most risky assets. It would be partially backed by taxpayers’ money.
Although the deal had not been finalised last night, creation of the new vehicle, which would remove the risk of the entire group being dragged down by its toxic assets, looked to be the most likely of several options under discussion to safeguard Citigroup’s future. However, one source cautioned that the situation was still “very fluid” and that the “bad bank” discussions could yet fall through.
Under the terms discussed, Citigroup would move tens of billions of dollars of its most risky loans and securities into a separate entity and agree to absorb the initial losses on those assets. The Government would cover any losses beyond a point that had yet to be finalised last night.
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Related News:
Citigroup nearing agreement with government: report - The US Daily, 23 Nov 08
Citigroup eyes moving risky assets: report - Natioanl Post, 23 Nov 08
