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| AIG signs terms for $85bn package | AIG signs terms for $85bn package |
| (about 1 hour later) | |
| Insurance giant AIG has signed the terms of its $85bn (£48bn) deal with the Federal Reserve Bank of New York, which is helping the firm stay afloat. | |
| The Federal Reserve announced the lifeline on 16 September when it emerged AIG was in danger of collapse. | The Federal Reserve announced the lifeline on 16 September when it emerged AIG was in danger of collapse. |
| Under the "definitive" two-year agreement, the central bank will have a 79.9% stake in the insurer. | Under the "definitive" two-year agreement, the central bank will have a 79.9% stake in the insurer. |
| The interest on the loan is steep but AIG said the facility was the firm's "best alternative". | The interest on the loan is steep but AIG said the facility was the firm's "best alternative". |
| Under the terms of the deal, interest will accrue at 8.5% above the rate of the three-month London Interbank Offered Rate, or Libor, which is the rate at which banks lend to each other. | |
| The firm will have to repay the loan by, among other things, the sale of certain assets as well as issuances of debt. | The firm will have to repay the loan by, among other things, the sale of certain assets as well as issuances of debt. |
| Borrowings under the facility are conditional on the Federal Bank of New York being "reasonably satisfied" with AIG's corporate governance, among other requirements. | Borrowings under the facility are conditional on the Federal Bank of New York being "reasonably satisfied" with AIG's corporate governance, among other requirements. |
| AIG's chief executive, Edward Liddy, said the company was "already developing plans to sell assets, repay the facility and emerge as a smaller but profitable company". | |
| A day earlier, news reports said the FBI was separately launching a probe into four key finance firms, including AIG, for potential fraud. | A day earlier, news reports said the FBI was separately launching a probe into four key finance firms, including AIG, for potential fraud. |
| Other firms named were Fannie Mae and Freddie Mac and failed bank Lehman Brothers. | Other firms named were Fannie Mae and Freddie Mac and failed bank Lehman Brothers. |