Monday February 23, 2009
Navivest

Citigroup (C) is reportedly in talks with the government, to have the government bump its ownership of the bank up to 40%, according to the Wall Street Journal.

According to the newspaper, if the government does end up upping its stake, it won’t come at a cost to taxpayers. Instead, current shareholders will suffer losses, as their holdings would get diluted.

To be able to complete such a deal, Citigroup may have to convince some of its stockholders such as the Government of Singapore Investment Corp., Abu Dhabi Investment Authority and Kuwait Investment Authority, who have preferred shares of the company, to convert some of their preferred shares into common stock.

Interestingly enough, Citigroup shares, as well as stock market futures are up in after hours trading on the news after stocks took a beating last week, on concerns that the government might start nationalizing banks. Now we get news that the government might increase its stake in the bank, and the stock market is indicated to open higher.

Citigroup shares closed at $1.95 on Friday, after falling $0.56 or 22.31%.

Tags: stock market futures  citi  nationalization