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US rescues ailing Citigroup bank US rescues ailing Citigroup bank
(20 minutes later)
The US government has announced a rescue plan for the Citigroup banking giant after its shares plunged by more than 60% last week.The US government has announced a rescue plan for the Citigroup banking giant after its shares plunged by more than 60% last week.
The US treasury department is to invest $20bn (£13.4bn) in return for preferred shares in Citigroup.The US treasury department is to invest $20bn (£13.4bn) in return for preferred shares in Citigroup.
The treasury and the Federal Deposit Insurance Corp will also guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books.The treasury and the Federal Deposit Insurance Corp will also guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books.
The plan follows a $25bn injection of public funds in the bank last month.The plan follows a $25bn injection of public funds in the bank last month.
Last week the company announced 52,000 job losses worldwide, on top of 23,000 job cuts previously announced.Last week the company announced 52,000 job losses worldwide, on top of 23,000 job cuts previously announced.
'Protecting taxpayers'
We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks Federal statement
The action plan was announced after emergency talks over the weekend between the bank and the treasury department, the Federal Reserve and the Federal Deposit Insurance Corp.The action plan was announced after emergency talks over the weekend between the bank and the treasury department, the Federal Reserve and the Federal Deposit Insurance Corp.
Citigroup is the second-largest US bank and has operations in more than 100 countries.Citigroup is the second-largest US bank and has operations in more than 100 countries.
Many analysts had calculated that the huge financial institution was too big to allow to fail.Many analysts had calculated that the huge financial institution was too big to allow to fail.
"With these transactions, the US government is taking the actions necessary to strengthen the financial system and protect US taxpayers and the US economy," the three agencies said in a statement."With these transactions, the US government is taking the actions necessary to strengthen the financial system and protect US taxpayers and the US economy," the three agencies said in a statement.
"We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks," they added.
The cash injection will come from the $700bn financial bail-out fund created last month.The cash injection will come from the $700bn financial bail-out fund created last month.