US govt to provide $20 bn cash lifeline to Citigroup - Will this move save Citi : We doubt.

Finally uncertainty has gone for Citigroup and it is the time to celebrate with caution. Caution? Why? - Because the inherent problems in economy are not solved. Citigroup is kept on the ventilation, a life support, and it is on its way to get nationalized sooner or later. A $20bn worth of injection by FED will not be enough to give it a new life. You can see all the global equity market which is celebrating this move will soon realize that the real problem economy is facing is still there and there is no point being happy. Don't worry our stock market will also celebrate tomorrow but it will not last long.

• The U.S. government bailed out Citigroup Inc, agreeing to shoulder most of the potential losses on $306 billion of high risk assets, in its most sweeping rescue of a U.S. bank yet in the global economic crisis.
• The government will also inject $20 billion of new capital, on top of $25 billion it just put into the bank, and receive preferred shares with an 8 percent dividend. Citigroup received the latest infusion after its shares plunged 60 percent in the last week, amid worry it lacked enough capital to survive.
• Citigroup will not have to replace Chief Executive Vikram Pandit or other top management, but the government will have the final say on executive pay agreements.
• Citigroup has the farthest international reach of any U.S. bank, with operations in more than 100 countries. The bank was widely perceived to be too big to be allowed to fail, because any collapse could cause financial havoc around the globe.
• The government has put well over $1 trillion of taxpayer money at risk. The Big Three automakers in Detroit are seeking billions of additional dollars to avoid possible bankruptcy.
• The US government statement said, "The US Treasury and the FDIC will provide protection against the possibility of unusually large losses on an asset pool of nearly USD 306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup's balance sheet."

- Abhishek Sonu, Associate, HBJ Capital