Citigroup's rescue package 'may not suffice' to save it

4 March 2008

Despite the billions of dollars of handouts that Citigroup has been forced to accept to shore up its balance sheets, the largest bank in the US could need a lot more than it has already received.

According to Bloomberg, bosses at Dubai International Capital have warned that Citigroup could need even more cash injections from investors to help the bank stay afloat.

After the collapse of the US sub-prime mortgage market, Citigroup has lost billions of dollars in bad debts, nearly halving the bank's market value.

But even after Abu Dubai handed over $7.5 billion in November and a further $14.5 billion will come from other investors, including the state funds of Singapore and Kuwait, it still may not be enough.

Sameer al-Ansari, chief executive officer of Dubai International, warned: "It will take a lot more than that to rescue Citi and other financial institutions.''

Now analysts at Merrill Lynch are expecting Citi to post a loss of $1.66 per share for the first quarter of 2008 after $15 billion more sub-prime-related writedowns.

Stock in Citigroup dropped a further 30 cents to $22.79 in German trading.

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