NEW YORK: Citigroup Inc. won a vote of confidence from Prince Alwaleed bin Talal, its largest individual investor, who said yesterday he plans to boost his stake in the US banking giant to 5 percent from less than 4 percent. Shares of Citigroup rose 21 cents to $6.61 in premarket trading following the news. But the move failed to revive investor confidence as Citigroup shares fell as low as $4.77, a nearly 14-year low, in morning trade on the New York Stock Exchange.
Prince Alwaleed said the bank’s shares were “dramatically undervalued” following a nearly 90 percent plunge since late 2006. He also expressed “full and complete support to Citi management,” including embattled Chief Executive Vikram Pandit, who earlier this week announced a plan to cut 52,000 jobs. But investors were unimpressed, and many questioned the bank’s ability to withstand what are expected to be billions in additional loan losses in 2009.
Citigroup, which has lost more than half of its value this month alone, was the top decliner among large US banks, but the carnage was widespread. J.P. Morgan Chase & Co. was down 13 percent and Bank of America Corp. was off 7 percent.
And in a year that has seen the rescue of giant insurer American International Group Inc. and mortgage giants Freddie Mac and Fannie Mae, some speculated about the possibility of government intervention.
Citigroup’s market value was $34.9 billion on Wednesday, meaning that Alwaleed plans to invest at least $349 million, based on Wednesday’s closing price.
In a statement, Alwaleed said the New York-based bank is “taking all the necessary steps to position the company to withstand the challenges facing the banking industry and the global economy.”