– Thoughts on Strategy and Management

Banks fall into loss on writedowns

A couple of days ago (see this post) I had assumed that the financial reports of the fourth quarter would present new cumulative value adjustments. Yesterday Citigroup announced its financial results. Due to writedowns of $ 18.1 billion in the business segments subprime mortgage and increased losses in the segment consumer loans the loss is $ 9.3 billion.

To stabilize the capital fundament Citigroup will raise $ 12.5 billion in new capital through the sale of convertible preferred securities. Where the capital will come from? In the case that you are new reader to this blog, see this old post and you can guess the answer. Yes, the new very good friends of large international players will make Citigroup’s day – the sovereign wealth funds.

  • Fund 1: Government of Singapore Investment Corporation (GIC) invests $ 6.88 billion. GIC had made yet major investments in Swiss UBS last year.
  • Fund 2: Kuwait Investment Authority (KIA)
  • Prince Alwaleed bin Talal
  • Sandy Weill (the former CEO)
  • Public investors ($ 2 billion)

In the next couple of days it will be essential to update this overview.

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