Another day, another bailout

When the US government finally succumbs to the inevitable, will Citi be the biggest state owned bank in the world? The latest bailout out aims at 40 percent state ownership, but I bet this won't be the last cash injection.

The US government on Monday signalled that it was willing to raise its equity stake in Citigroup – a move that would further nationalise the troubled bank but avoid full nationalisation.

The Treasury said it was willing to convert its existing preferred shares into common stock – an idea proposed by the ailing bank as a means of shoring up investor confidence. ”We are open to considering a request to so do,” a spokesman said.

Citi is pressing the government to agree on a new capital injection that would increase the authorities’ stake to about 40 per cent but stop short of an outright nationalisation.

(From the FT)