Singapore’s GIC Invests US$6.88B In Troubled Citigroup
No doubt one of the biggest piece of Singapore financial news today would be that of the Government of Singapore Corporation (GIC) investing US$6.88 billion in American bank Citigroup, which totals over half of the latest rounds of funds raised by the troubled banking giant. US$12.5 billion were gathered from private investors including a couple of Middle Eastern groups with Saudi Prince Alwaleed bin Talal numbering amongst them. This comes after the latest released reports of US$9.83 billion in net losses for the fourth quarter, which could see almost 20,000 losing their jobs with Citigroup. That is on top of the US$18.1 billion write-down the bank has undertaken in exposure to dodgy sub-prime mortgages.
In earlier Singapore financial news, GIC has stated that their investment structure provides “appropriate downside protection” which will see long term expected lower returns despite the risk. Interestingly it raises GIC’s holding in Citigroup to 4 per cent, and GIC has stated that it does not have plans for a board seat at Citi. This no doubt comes after criticism leveled at other American financial institutions’ moves to seek investment funds from Asian and Middle Eastern sources.
This could simply be a move by GIC to strengthen its investment portfolio and provide a broader management of investing Singapore’s reserves. With the threat of 20,000 Citi jobs at risk, it might or might not have vested interest in ensuring that this does not have greater downstream impact to Singapore’s economy, which is enjoying satisfactory growth against the gloomy global economic outlook, as reported frequently in Singapore financial news. GIC has also sunk US$300 million with US property hedge Rosen Real Estate Securities to take advantage of falling values in the US property market and real estate.
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