One of the largest banks of the USA has been trying to deal with mounting losses. Many Americans do not realize that the largest shareholder of this giant U.S. bank is actually Prince Alwaleed, from the Middle East! While the oil producing nations of the Middle East are awash with money, due to high oil prices, the problems at Citigroup are large even by their standards. And these losses continue to grow.
While Citi Bank gets generally good press in the USA, many bankers in the U.S. would be very upset if they realized how deep the losses and problems of this major bank are and how U.S. regulators seem to be relatively easy on Citigroup, while they are tough on much smaller banks for much smaller problems. There can be no denials that the problems and losses the bank faces due to the loan and investment losses have been substantial. Even with major investments from the Middle East, the "hole" of losses and problems seems to be a "black hole" that cannot be easily filled.
Sameer Al Ansari, Chief Executive of Dubai International Capital was quoted as telling delegates at a private equity conference that it will take more than the combined efforts of the Abu Dhabi Investment Authority, the Kuwait Investment Authority and Saudi investor Prince Alwaleed bin Talal " to save the bank".
"It's going to take more than that to rescue Citi," Ansari said. He added that more write downs are expected and that Middle Eastern and Gulf investors would have to invest even more to support Citibank (Citigroup).
Several huge funds in the area have invested heavily in Citigroup: One of the world's largest capital funds, the Abu Dhabi Investment Authority, or ADIA, a sovereign wealth fund owned by the world's fourth-largest oil exporter, last year bought a 4.9% stake in Citigroup. The Kuwait Investment Authority has committed to invest $3 billion in Citigroup.
"It would take a lot more money to rescue Citigroup," said Al Ansari at a recent event.
Investment and intervention of sovereign funds such as ADIA, which pumped $7.6 billion into Citi, has failed to stop a decline of interest on the stock market, because of the $11 billion sub-prime write-down of the bank.
Citi's stock shares have declined substantially during this time.
The bank lost $9.83 billion in the fourth quarter because of $18 billion in write-downs.
The largest investor in City is Prince Alwaleed, the largest shareholder of the bank group. City hopes to raise another 14.5 billion in capital, because of bad decisions on the part of the bank. Note, that is billion with a "B".
These numbers are almost breathtaking. We can only hope that our Government will take notice and regulate the abuses of CitiBank rigorously. Perhaps it is one of the banks that should be sold off into many parts and give this power back to the local banking leaders around the nation.