Citi, Merrill Seek Further Foreign Capital Injections

Christopher Owen 11 January 2008

Citi, Merrill Seek Further Foreign Capital Injections

US banking giants Citigroup and Merrill Lynch are both said to be in discussions to raise further capital from investors, primarily sovereign wealth funds, said The Wall Street Journal. Citigroup could seek as much as $10 billion, while Merrill is expected to find up to $4 billion, much of it from a Middle Eastern government investment fund, the report said. Citigroup's board is also expected to discuss halving the firm's dividend, which could save more than $5 billion a year. Giant investment banks, with the notable exception of Goldman Sachs, have been recapitalising to offset huge subprime mortgage write-downs. In November, Citigroup agreed to sell up to a 4.9 per cent stake to Abu Dhabi for $7.5 billion, while UBS accepted a $9.75 billion investment from a separate Singapore state fund. In December, Merrill Lynch garnered $7.5 billion after selling a stake to a Singapore government investment fund and an asset manager, and Morgan Stanley is to receive $5 billion from China after recording $9.4 billion of writedowns.

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