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Wednesday 16th of September 2009
November 21, 2008    

Citigroup in sell-off and merger rumours

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by Kay Murchie

US banking giant, Citigroup, is rumoured to be in merger talks with after its shares plunged 26% yesterday amid fears about its financial viability.

Shares in the bank were trading at $54 two years ago, however, the shares closed yesterday at $4.71.

The bank, which is one of the largest banks in the US, announced plans to slash 52,000 jobs earlier this week, as it aims to cut costs due to enormous losses which arose from the US sub-prime mortgage crisis and the credit crunch.

The Wall Street Journal has reported that Citigroup is considering to sell parts of the bank or even the whole business. There is speculation that it is considering merging with another bank.

Yesterday, Saudi Prince Al-Waleed Bin Talal’s purchased around $350 million (£236 million) worth of shares, however, this did not allay investors’ fears.

However, Citigroup insists that it has ‘ample capital’.

Some analysts believe the bank will not make a profit again until 2010 after it has lost over $20 billion (£13.6 billion) in the last 12 months alone

The bank is one of nine institutions receiving financial aid from the US Government’s bailout package.

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