Report: Citigroup may need $10B in extra capital

[May 02, 2009]  NEW YORK (AP) -- Citigroup Inc. may need to raise as much as $10 billion to meet the government's increased capital standards for banks outlined in its stress tests, according to a report.

The New York-based bank is negotiating with the Federal Reserve and may need less capital if it is able to convince regulators of its financial health, The Wall Street Journal said on its Web site. The report cited people familiar with the matter.

A Citigroup spokeswoman said the bank had no comment on the Journal story.

On Friday, the government pushed back its expected release date of the stress test results to Thursday from Monday, as regulators negotiate with the banks over the findings.

Last week, Fed officials said all 19 banks that underwent the stress tests will need to keep extra capital on hand beyond what's now required in case losses on loans and other assets continue to climb. That was a signal some banks would have to raise more cash. Initial results indicated that both Citigroup and Bank of America Corp. would be among that group, sources told The Associated Press earlier this week.

Banks will have up to six months to raise money from private sources, Federal Reserve Chairman Ben Bernanke has said. If they can't, the government would provide aid.

Citigroup has already received $45 billion in federal funds.

The government, which will soon own a 36 percent stake in the bank, also has agreed to insure a pool of more than $300 billion of its riskiest assets.

Earlier Friday, Citigroup announced that it was selling its Japanese brokerage business to Sumitomo Mitsui Financial Group Inc. for about $5.6 billion. The troubled bank has been shedding businesses over the past year to slim down and raise cash.

Citigroup posted a first-quarter loss to common shareholders of $966 million, or 18 cents per share. The loss was smaller than analysts had forecast.

Citigroup shares closed regular trading Friday down 8 cents, or 2.6 percent, to $2.97.

[Associated Press]

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