24 Nov 2008

Citigroup talking to US govt as shares dive - report

6:55 am on 24 November 2008

The giant bank Citigroup has begun talks with the US government as its plummeting share price raises doubts about its ability to survive, according to the Reuters news agency.

Bank representatives have met officials from the Federal Reserve and the US Treasury Department in recent days to discuss its options, which include an endorsement from the government and another capital injection from the Treasury.

The bank's management has also internally discussed selling off units or finding another bank to merge with.

But it is not clear if anything short of capital from the government will soothe markets that are increasingly questioning whether Citigroup has enough capital to withstand the recession, Reuters quoted a source as saying.

Citigroup spokeswoman Christina Pretto declined to comment.

Citigroup's shares lost 20% of their value on Friday, closing at $US3.77, down 60% for the week and reaching their lowest level since December 1992.

Chief Executive Vikram Pandit, working hard to regain employee confidence on Friday, said on a company-wide conference call that the bank does not want to change its business model and plans to keep its Smith Barney brokerage, despite news reports to the contrary.

He also said Citigroup had a solid capital position, and that employees should not focus on the bank's falling share price because that is not what regulators and credit rating agencies worry about, the people said.