Facing mounting losses on mortgage-related investments, the financial giant is in talks to sell a large stake to a Chinese bank and several other investors, including foreign governments, in a deal that could raise $10 billion, The New York Times reported Saturday.
The China Development Bank, which is controlled by the Chinese government, is expected to invest at least $2 billion. Citigroup is also in talks with the Government of Singapore Investment Corporation and the Kuwait Investment Authority, the leading US daily said.
Large investors like Prince Walid bin Talal of Saudi Arabia and Capital Research and Management, the bank's biggest shareholder, are being offered the chance to invest as well to avoid having their current stakes diluted.
Announcements are expected within days, the Times said.
The need is indeed dire. The company is likely to announce charges of $12 billion to $18 billion when it reports earnings on Tuesday.
Already, in November, Citigroup sold a $7.5 billion stake (5 per cent) to a Middle Eastern fund, Abu Dhabi Investment Authority, underscoring its weak finances.
Pandit, who took over as CEO in December, and other Citigroup executives have been working on the transactions with potential investors for several weeks. Several high-ranking members of his team returned from Asia in the last few days, the paper reported.
Since taking over, Pandit has already replaced several senior executives with his own lieutenants and reorganised Citigroup's mortgage business.
A shake-up in the company's consumer lending business is also likely soon.
After laying off 17,000 employees last spring, Citigroup is bracing itself for another round of layoffs.
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