Citi’s Pandit seeks to reassure employees about bank’s future (Lead)February 23rd, 2009 - 10:23 pm ICT by IANS
Washington, Feb 23 (IANS) Amid reports that the US government is in talks to increase its stake in the Citigroup, its Indian American chief executive Vikram Pandit sought to reassure employees about the ailing banking giant’s future.
“As you know, financial markets around the world remained under great pressure this week, again fuelling speculation about additional intervention in financial institutions by the US government,” he said in a “Dear Colleagues” letter Monday.
“As we continue to navigate these unprecedented times, I want to reassure you that I remain very confident in Citi’s prospects and business position around the world,” he said.
“While rumours and speculation persist in the market”, Pandit said, he wanted to highlight statements earlier from US government officials.
The White House reiterated that it continues to strongly believe that “a privately held banking system is the correct way to go”.
Additionally, the US Treasury Department said it “plans to preserve a financial system that is owned and managed by the private sector”.
Pandit’s letter came amid reports that Citigroup Inc. is in discussions with regulators about a plan for the federal government to take a larger ownership stake in the bank, according to published reports.
The Wall Street Journal, citing sources familiar with the matter, reported that the government would convert a large portion of its preferred Citigroup shares to common shares.
The government received the preferred shares in return for investing $45 billion in Citi as part of the $700 billion bailout of the financial system.
According to the Journal, the talks involve Citi executives and regulators at the Federal Reserve and Office of the Comptroller of the Currency. Officials in the Obama administration have not said whether they support the plan, the Journal reported.
Citigroup spokesman Michael Hanretta declined to comment on the Journal report. On Friday, the bank issued a statement saying its capital base is “very strong” and capital reserves were among the highest in the industry at the end of the fourth quarter.
“We continue to focus and make progress on reducing the assets on our balance sheet, reducing expenses and streamlining our business for future profitable growth,” Hanretta said.