Citigroup gets new rescue

The US government will own up to 36 percent of Citigroup under a deal announced Friday to convert up to 25 billion dollars of capital injected into the ailing bank to ordinary shares.
The conversion does not call for more government funds but helps shore up the troubled banking giant's capital position, according to Citi and US officials.
The US Treasury would convert up to the 25 billion dollars injected in the form of preferred stock under two bailouts for Citi, once the world's biggest financial services firm.
Citigroup said the Treasury's conversion of its preferred stock from its 45 billion dollars so far pumped into the crisis-ridden bank could see the government take a stake of up to 36 percent.
"Based on the maximum eligible conversion, the US government would own approximately 36 percent of Citi's outstanding common stock and existing shareholders would own approximately 26 percent of the outstanding shares," the bank said in a separate statement.
"All investors' new stakes will be determined following the exchange."
Richard Parsons, Citigroup chairman, said the bank's board would be revamped.
"The board unanimously decided to have a majority of new independent directors as soon as feasible," he said in a statement.
The move to shore up the capital base of Citigroup comes amid market jitters over the strength of US banks saddled with possibly trillions of dollars of soured home mortgage securities.
The mortgage crisis triggered global turmoil and slammed the brakes on economic growth.
The Treasury Department stressed that the "transaction does not increase the amount of Treasury's investment in Citigroup."