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Citigroup may need more capital as losses mount
Citigroup, the biggest US bank, may need additional capital from outside investors as losses stemming from the collapse of the US subprime mortgage market increase, the head of Dubai International Capital (DIC) said.
- Bloomberg
- Published: 00:36 March 5, 2008
Dubai: Citigroup, the biggest US bank, may need additional capital from outside investors as losses stemming from the collapse of the US subprime mortgage market increase, the head of Dubai International Capital (DIC) said.
Citigroup received $7.5 billion in November from Abu Dhabi, after record mortgage losses wiped out almost half the company's market value and led to the departure of CEO Charles Prince.
The New York-based company said in January it was getting another $14.5 billion from investors, including the governments of Singapore and Kuwait.
"It will take a lot more than that to rescue Citi and other financial institutions," said Sameer Al Ansari, CEO of DIC, at a private-equity conference in Dubai on Tuesday.
DIC is among the investment funds controlled by the Dubai government.
Citigroup probably will report a first-quarter loss of $1.66 a share after $15 billion of mortgage-related writedowns, Merrill Lynch analyst Guy Moszkowski said in a report.
Markdowns
The company also may have $3 billion of markdowns from loans used to finance leveraged buyouts and commercial real estate, Moszkowski estimates.
Citigroup slumped 54 per cent in New York trading during the past 12 months. The stock fell 30 cents today to $22.79 in German trading.
Moszkowski also cut his earnings estimates yesterday for Bank of America, the second-largest US bank by assets, and Wachovia, the country's No 4 bank, because of the deteriorating credit markets. Both companies are based in Charlotte, North Carolina.
Qatar, Kuwait and the UAE, which are loaded with cash from record oil and gas revenue, have purchased stakes in US and European financial institutions, including Merrill Lynch, Morgan Stanley and UBS, as losses mounted from the US mortgage market.
In all, banks and securities firms have so far raised about $105 billion from sovereign wealth funds, governments and public investors, according to data compiled by Bloomberg.
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