Citigroup Gets Guarantees on $306 Billion of Assets

Citigroup Inc. will have $306 billion of troubled mortgages and toxic assets guaranteed by the U.S. government under a federal plan to stabilize the bank after its stock fell 60 percent last week. Citigroup also will get a $20 billion cash infusion from the Treasury Department, adding to the $25 billion the bank received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend. The Treasury, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement late yesterday that the move aims to bolster financial-market stability and help restore economic growth. The decision came after New York-based Citigroup’s tumbling share price sparked concern that depositors might pull their money and destabilize the company, which has $2 trillion of assets and operations in more than 100 countries. “It really was a must-do thing,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which manages about $85 billion. “If they’d let Citigroup go, that would’ve been disastrous.” Citigroup’s stock has plunged 83 percent this year and dropped below $5 last week for the first time since 1995. The bank, which two years ago was the biggest by market value, has since slipped to No. 5 after racking up four straight quarterly losses totaling $20 billion amid the worst financial crisis since the Great Depression.