Abu Dhabi Saves The World As They Buy $7.5 Billion of Citibank Equity

Citigroup to Receive $7.5 Billion from Abu Dhabi Government

I don't know much about Abu Dhabi, but they just saved the world (economy, at least).

Bloomberg.com reports that Citigroup Inc., the largest U.S. bank, said it agreed to sell $7.5 billion of equity units to the Abu Dhabi Investment Authority.

And as of 11:00pm Monday Night (11/26/07), the Asian market is responding favorably to the news that Citibank has it's back covered by Abu Dhabi regarding sub-prime problems.

cnbc.com adds: The ADIA investment should help re-build Citigroup's capital levels, which have been eroded by a credit crunch that began in the summer. Citigroup Chief Executive Officer and Chairman Charles Prince resigned earlier this month after the bank, which had already written off billions of dollars, said it was facing as much as $11 billion more in losses.

Earlier on Monday, CNBC learnt that Citigroup is planning a second round of large-scale layoffs. Insiders say the firm has not set a target number of cuts. The finance giant has roughly 320,000 employees. But people with knowledge of the matter have described the pending job reductions as "massive" and "large." The total number could reach as high as 45,000, these people estimate.

Abu Dhabi is the second largest city of the United Arab Emirates. It is also the capital and largest city of the emirate of Abu Dhabi. CNN said it is the richest city in the world. The city lies on a T-shaped island jutting into the Persian Gulf from the central western coast. An estimated 1.8 million people lived there in 2006.

Wow! Only 1.8 million people and it is the richest city in the world! Must have something to do with the local oil industry!?!?

So looks like Abu Dhabi needs to protect it's investment, and make sure the U.S. sub-prime financial fears do not end up causing a domino effect throughout the world.

Because they have some big customers in China, Asia, India and across the globe. And if the U.S. slows down, the Big A-D knows that it will trickle into those markets, as well.

So if they have to help boost a weaker customer to help keep the stronger customers pumping along, so be it.

So Abu Dhabi has to help bail out Citibank, so that the one rusty cog doesn't break down the whole machine.

And as a result, the U.S. stock market will probably have the triumphant, magic "up" day they have been hoping for this holiday season.

Abu Dhabi, has agreed not to own more than 4.9 percent of Citigroup's common shares, according to the statement.

Thomson Financial reports that Japanese shares rallied into positive territory in early afternoon trade after losing more than 2 percent in the morning session, with trading focus switching to the announcement by Citigroup of the $7.5 billion bail-out by the Abu Dhabi Investment Authority for 7.5 billion US dollars.

"That news about Citigroup, one of the worst hit by the subprime loan mess, helped soothe the market's wariness to some extent, immediately sending the dollar back to above the 108 yen," NTT Smart Trade director Takashi Kudo said.

The announcement also supported US stock-futures contracts on the 24-hour traded Globex, raising expectations that Wall Street may get off to a firm start when trading resumes Tuesday.

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