Global stock markets rebounded on Monday after US regulators agreed a deal with Citigroup to provide the beleaguered bank with $20bn in additional capital and arrange $306bn in credit guarantees. The rescue plan,  forged over a weekend of tense talks, subjects Citi’s executive compensation plans to government control and will limit its common stock dividend to no more than 1 cent a quarter for the next three years. But the plan drew criticism from Washington lawmakers who said their constituents were suffering “bail-out fatigue” and pushed the Bush administration to give more help to homeowners. Market participants also cautioned that the gains in stock markets should be seen in the context of recent steep declines. Citi shares, for example, rose 58% to $5.95 but were still off more than 50% since early November, underscoring continuing doubts about the company and persistent tension in the credit markets. In Lex’s view, the complexity of the rescue “diminishes the punch from this solution”. Overall, though, Citi is “giving away remarkably little” for its newfound federal protection.

This entry was posted by Gwen Robinson on Tuesday, November 25th, 2008 at 5:51 and is filed under Capital markets. Tagged with citi. Edit this entry.