>> Citi Collapse and the bailout

The CitiGroup Bailout

Week-end reading about the "Too big to fail" CitiGroup collapse and the recent bailout. Vikram pandit has got a sweet deal for Citi:
- Citibank did not see red flags
- Citi;s woes started with the failed Wachovia bid
- Vikram Pandit scores a great deal for CitiGroup . Decide if this sounds should be read as US Tax-payers screwed-over again, here is the bailout summary:
- Under focus is the bundle of assets earlier valued at $340-350 billion, now "valued" at $306 billion on Citi's books ("just 11% down")
- Of this number, Citi will absorb the first 29-odd billion, rest the nice US Govt will take 90% of the hit with the remaining Citi's problem.
- Treasury takes the next $5 billion hit
- FDIC takes the next $10 billion hit
- Rest of the losses to to the Fed
- Add to that Citi will get a financing line from the Fed if these losses start to realize
- Citi gets to keep the income stream from these assets

In return, the US govt gets / enforces :
- $7 billion worth of preferred stock, $4 billion to the treasury and $3 billion to the FDIC
- The preferred stock pays 8% dividend
- Common stock will not pay a dividend of more than $.01 a quarter

Here is the term sheet.


CitiGroup - More looming trouble from SIVs

Citi perhaps has $1.1 Trillion of assets in an off-balance-sheet SIV, says bloomberg. Highlights:
- According to Citigroup's most recent financial statement, filed in May, the bank's $1.1 trillion of off-the-books assets as of March 31 included $760 billion of QSPEs and $363 billion of unconsolidated VIEs.
- Here is another article Bloomberg article on Citigroup SIVs : Citigroup SIV Accounting Looks Tough to Defend


Related : The Wells Fargo Ruling
On a related note, as for Wachovia being stolen right under Citi's nose:
- "The Wells Fargo Ruling" : Changes to Section 382 of the tax code - a windfall for US Banks


More Citi Articles:
- CitiGroup buys into Spanish infrastructure fund . You read that right :)

Also Read :
>> The $596 Trillion derivatives problem