Billion dollar rescue for Citigroup

The US government has bailed out banking giant Citigroup, with guarantees of $306bn and a $20bn cash injection. The rescue plan was announced after Citigroup's shares fell by more than 60 per cent last week, and follows an injection of $25bn of public funds last month.

In return for the cash and the guarantees for Citigroup's problem mortgages and other assets, the US Treasury will get $27bn of preferred shares in the bank, paying an 8 per cent dividend.

The troubled bank's was worth $20.5bn on Friday, compared with $270bn in 2006 before the collapse in the US sub-prime mortgage market triggered the global credit crisis. Last week Citigroup announced 52,000 job losses around the world.

US Treasury officials said that Treasury Secretary Henry Paulson and Federal Reserve chairman Ben Bernanke had worked throughout the weekend to get the package in place.