It's come to something when America's biggest bank has to "go cap in hand" to the Middle East for money, said Jeremy Warner in The Independent.
Citigroup (C) has raised $7.5bn from the Abu Dhabi Investment Authority (ADIA), a state-owned investment fund from the United Arab Emirates.
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The Gulf is buying convertible bonds; in the next four years the loan will turn into a shareholding of almost 5%, said James Harding in The Times. But Citigroup is paying an "extraordinarily high" interest rate of 11%. A firm resorting to junk bonds "would typically pay 9%". It seems Citigroup was so "desperate" for cash that "it did not mind the price".
When you consider how "sniffy" America got when Dubai Ports bid for P&O's ports in the US, Citigroup's hasty acceptance of this deal (clinched in under a week) "is positively indecent", said The Daily Telegraph's Tom Stevenson.
What next?
The deal could be a template for other banks hit by the subprime crisis, said the FT. Already Middle East and Asia investment funds have bought an estimated $37bn shares in Western financial companies this year. The Gulf is awash with cash and increasingly flexing its financial muscle abroad, said Harding: the global balance of economic power has shifted.
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Reeves ‘looks at minimum UK shareholding' in ISA reformOn top of a rumoured £10,000 cash ISA limit, chancellor Rachel Reeves is reportedly considering adding a minimum UK shareholding requirement to the stocks and shares ISA
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Rightmove: Asking prices rise by 0.3%, but increase is lower than typical for OctoberOctober saw asking prices grow by £1,165 on average, Rightmove says, but the increase is far below the usual autumn bump as the property market braces for next month’s Budget.
