As part of the ongoing bailout of Citigroup, it was recently announced that the government’s investment of about $25 billion in preferred stock would be converted to common shares, increasing the government’s ownership from 8 percent to about 36 percent. This move was designed to remove a large amount of expensive preferred stock from Citigroup’s balance sheet, shoring up the firm’s tangible common equity and hopefully calming down the continually deteriorating financial markets. As a result, the government became by far the largest shareholder of Citigroup stock, while stopping short of a full-blown “nationalization,” according to a popular view. But are we on a path to a nationalized banking sector?
How to Spot a Nationalized Bank
As part of the ongoing bailout of Citigroup, it was recently announced that the government’s investment of about $25 billion in preferred stock would be converted to common shares, increasing the government’s ownership from 8 percent to about 36 percent. This move was designed to remove a large amount of expensive preferred stock from Citigroup’s […]
April 03, 2009