Citigroup gets $7.5 billion investment from Abu Dhabi
In a move that was long rumored, Citigroup Inc. (NYSE:C) is getting a $7.5 billion cash infusion from the investment arm of the government of Abu Dhabi, according to the Wall Street Journal. (subscription required)"The investment by the Abu Dhabi Investment Authority will help rebuild Citigroup's capital levels, which have been eroded by a credit crunch that began in August. Citigroup Chief Executive Officer and Chairman Charles Prince resigned earlier this month after the bank, which had already written off billions of dollars, was facing as much as $11 billion more in losses," the paper said.
ADIA will become one of Citigroup's largest shareholders with a stake greater than Saudi Prince Alwaleed bin Talal, reportedly the company's largest individual shareholder, people familiar with the matter told The Journal.
News of the investment should give a boost to Citigroup's shares which have tanked about 45% this year and perhaps other financial stocks including Merrill Lynch & Co. (NYSE: MER) and Bear Stearns Cos. (NYSE: BSC), which are down as much as Citigroup
That impact, though, may be short-lived because there may be another shoe or two still left to drop in continuing saga of the subprime mortgage meltdown.
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