Citigroup gets $7.5b from Abu Dhabi

NEW YORK: Citigroup, reeling from the US housing slump and a related credit squeeze, announced on Monday it will receive a $7.5 billion injection from the Abu Dhabi government.

America's second biggest banking group, Citigroup said it had agreed to sell the Abu Dhabi Investment Authority (ADIA) $7.5 billion worth of "equity units," with mandatory conversion into common shares, elevating the ADIA's total holding in Citigroup to 4.9 per cent.

"This investment, from one of the world's leading and most sophisticated equity investors, provides further capital to allow Citi to pursue attractive opportunities to grow its business," Win Bischoff, Citigroup's acting chief executive said in a statement.

The agreement will build "on a series of actions we have taken over the past several months to strengthen our capital base," said Bischoff.

"This investment also enables us to access capital in an efficient manner, and is consistent with our strategy of maintaining a balance sheet that benefits from highly diverse sources of funding in terms of both geography and type of security," he added.

ADIA has agreed to limit its holding in Citigroup to no more than 4.9 per cent, and it will not receive special rights of ownership or control, the banking group said in its statement.

ADIA will not have any role in the bank's management or governance, nor the right to designate a member of the bank's board of directors, usually a privilege accorded large shareholders.

Meanwhile, CNBC said on Monday Citibroup is planning "large" job cuts seven months after it announced a mass layoff of 17,000 employees.

On November 5 Citigroup revealed it was facing likely investment writeoffs of between eight and $11 billion, mostly related to the meltdown in the market for securities backed by high-risk subprime mortgages.

Analysts at Goldman Sachs believe the company could be forced to absorb eventual writeoffs of up to $15 billion in the coming quarters as the US housing and credit markets show no sign of improving.