London: Global financial services firm Citigroup is in advanced talks with regulators over its plans to raise more than $15 billion through an equity offering, a media report says.
According to a report in the Financial Times, Citigroup is planning to raise the funds in an effort to repay $20 billion of bailout funds as soon as possible.
Attributing to people close to the situation, the daily said Citi was also planning to raise around $2 billion of mandatory convertible securities. They are a new form of security that convert into equity when a bank’s capital ratio falls below a pre-determined level.
However, people said the talks were at a delicate stage and could collapse without a deal as some among Citi’s regulators were concerned that the bank might not be strong enough to repay the funds from the troubled asset relief programme (TARP), FT said.
Moreover, the government is also likely to announce its intention to sell its 34% stake in Citigroup over a period of a year or so.
Citing inside sources, the daily said that the future of an insurance policy provided by the Federal Deposit Insurance Corporation over some $300 billion of Citi’s toxic assets was also under discussion.
On Wednesday, Bank of America formally returned its bail-out funds to the government, bringing the total amount of repaid TARP cash to $116 billion.