Citi shares sink despite Saudi prince’s investment
By MADLEN READ and STEPHEN BERNARD, The Associated Press
2:30 a.m. November 21, 2008
NEW YORK — Citigroup Inc. shares tumbled below $5 a share Thursday to their lowest level in more than 15 years, a sign that a Saudi prince’s decision to boost his stake in the bank has failed to galvanize confidence among increasingly anxious investors.
Prince Alwaleed bin Talal, a longtime investor in Citigroup, said he plans to increase his stake in the bank to 5 percent from less than 4 percent. He also expressed “his full and complete support” of the bank’s management – including Vikram Pandit, who has been CEO for less than a year.
It wasn’t clear whether his roughly $350 million investment – calculated based on Citigroup’s current market capitalization – would be used to buy new shares issued directly by Citigroup, or to buy stock from other shareholders in open market transactions. In either case, it was seen as paltry compared with the more than $20 billion in losses Citigroup has racked up over the past four quarters, and the expectation that it will post another large loss in the fourth quarter.
“It’s not a significant strategic investment statement,” said Peter Kenny, managing director in institutional sales at Knight Equity Markets. “And the question Wall Street is asking is, is this good money after bad?”