Getting toward nightfall on Sunday in New York, and Citigroup’s board is ‘locked in crisis talks’, according to the FT.
The board is ‘considering all options’, including including a change in top executives, the sale of some prized assets or an outright merger. And, according to one person consulted on the bank’s plans, Citi’s main move could be to create a “bad bank” along the lines used by UBS last month, the FT said.
CNBC’s Charlie Gasparino appears to have been similarly briefed; according to an email sent around by CNBC’s PRs,
the government is looking to buy a substantial amount of assets from citi, similar to a good bank, bad bank structure. The government would absorb much of the losses for citi if there are losses and citi would issue preferred stock to the government. The deal is not finalized but could be announced tonight
While government could buy more than $100 billion nominally in the bad assets if the plans go through, that doesnt mean it will pay citi $100 billion, depending on the final valuation of those assets. According to people with knowledge of the discussions between Citigroup and the government, the plan for Citi resembles the orginal TARP proposal, in which the government would buy bad assets for financial firms at some price higher than what’s being offered in the market.
Related links:
The Citigroup betting pool - The Baseline Scenario
Who will take over Citi? - Felix Salmon
