The US government is poised to take a 34 per cent stake in Citigroup, increasing both its exposure to and influence over, the troubled financial group following Sunday's completion of a long-awaited $58bn share offering.
The move is a milestone in a financial crisis that has forced the US authorities to come to the rescue of some of the largest institutions in the country. Citi has been a repeated recipient of government aid and is the only large surviving bank to have had to cede a shareholding to the government.
Citi announced last night that virtually all of the non-government holders of preferred shares had agreed to convert them into common stock, a move that will pave the way for the government to complete the exchange of its $25bn of preferred shares in the next few days.