- Wealth PMS
Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants.
Depositors DO NOT LOSE ANYTHING. Deposits are safe – guaranteed by Citi and then FDIC.
Citi taking a $42 billion loss (if it happens) – this is huge. It’s too big to fail of course, but even with the bailout its capital will need serious replenishing. This is not a lot of fun to watch, but from a trader’s point of view it is good.