Updated Wednesday, August 12, 2009 9:57 am TWN, By Stephen Bernard, AP
Citigroup approves US$6 bil. in new lending initiatives for Q2
NEW YORK -- Citigroup Inc. said Tuesday it approved US$6 billion in new lending initiatives during the second quarter as part of its programs supported by government bailout funds. The New York-based bank said it has now approved US$50.8 billion in lending programs tied to receiving money as part of the Troubled Asset Relief Program, or TARP. The program was launched last fall by the Treasury Department to help stabilize the lending markets at the peak of the credit crisis.
Citigroup has received US$45 billion in TARP money since last October. A portion of that money was recently converted into a 34-percent ownership stake for the government.
Among the money approved for lending, US$15.1 billion has been deployed, the banking giant said in its third quarterly update on how it is expanding lending efforts after receiving government money.
Two new programs, worth up to US$6 billion, were approved by Citi in the second quarter. Citigroup will provide up to US$4 billion in municipal letters of credit and another US$2 billion for mortgage originators.
The lending initiative for municipalities builds on a US$5 billion program Citi approved in the first quarter that provides loans to municipal clients to directly fund capital projects, such as building new infrastructure. The letters of credit will be available to local governments, municipal agencies, health care groups and other public finance clients for up to three years.
The US$2 billion for mortgage originators will be available as loans known as warehouse lines of credit. Mortgage lenders will tap the lines of credit to originate new mortgages. When the new mortgages are then sold in the secondary markets, the money is repaid on the credit line. It then becomes available again to write new loans.
A majority of Citigroup's lending initiatives since receiving TARP funds have been geared toward the mortgage market, which began to collapse in 2007 and helped push the country into recession. Mounting loan losses on failed mortgages and the declining value of investments tied to the real estate loans have been the primary drivers of losses at banks and other financial institutions.
Zurück
