The US Government has stepped in to bail out banking giant Citigroup, agreeing to guarantee $306bn (£205bn) of high-risk assets. It will also inject $20bn (£13.4bn) of new capital, on top of $25bn (£15.3bn) Citi has already received, in its most sweeping rescue of a US bank yet.
In return it will receive $7bn (£4.7bn) in preference shares and the final say on executive pay agreements. The rescue by the Treasury, Federal Reserve, and the Federal Deposit Insurance Corporation comes after Citi’s shares plunged 60% over the last week. It followed the announcement it planned to cut 52,000 jobs globally.
At least 1,000 of the jobs are expected to come from the UK, which has 12,000 staff across its consumer, city banking and Egg online credit card and savings divisions.
The company is considered the most vulnerable among the major US banks, failing to make a profit in the past four quarters. It has a small consumer banking business in the UK, which it has planned to grow, but analysts say this is now unlikely.
It bought loss-making internet business Egg from Prudential in January last year for £575m as part of a global strategy to grow its credit card business.