Rescue of Citigroup comes with strings attached
The International Herald Tribune informed that Citigroup (stock ticker: C) will halt dividend payments for the next three years and agree to restrictions on executive compensation under terms of the U.S. government rescue of the struggling bank, it was revealed Monday.
Citigroup had to make the concessions in return for the U.S. government’s direct investment of about $20 billion in the bank and an agreement to back about $306 billion in loans and securities.
Investors reacted positively to the rescue, sending stocks higher on Wall Street and the big European exchanges. The Dow Jones industrial average was 280 points higher in midafternoon trading, extending its 300-point rally Friday as financial shares began to recover. The Standard & Poor’s 500-stock index rose 4.7 percent. The Dow Jones Euro Stoxx 50, an index of blue-chip shares, closed up 9.9 percent, as did the FTSE 100 in London.
Shares of Citigroup - perhaps the market gauge most widely watched Monday morning - were 53 percent higher and traded above $6 a share for the first time since Thursday. A year ago, the shares were trading at about $30. Read the rest of this entry »
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