Citigroup Taiwan assures public it’s doing ‘OK’

“Citi Taiwan has abundant cash and capital. Any news or reports suggesting otherwise are false and baseless,” the local United Evening News quoted Victor Kuan, Citi Taiwan CEO, as saying. “Our capital adequacy rate is higher than required by the regulators.”

Citi Taiwan further stressed, citing data from the Financial Supervisory Commission (FSC), that the bank’s pre-tax profit over the first eight months of the year was NT$11.22 billion, the second largest by any bank in Taiwan. It added Citi’s Taiwan business has always done well and brilliantly, and Citi Taiwan’s operations are running normally without any problems.

Citi Taiwan declined to add additional comments, following an unwritten rule among foreign banks in Taiwan that all comments dealing with a firm’s finances are to be made by the firm’s global headquarters.

The U.S. government Sunday night said it will provide a multibillion-dollar backstop for Citigroup to protect the banking giant that is deeply intertwined with the global financial system.

The U.S. Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. announced they will protect Citigroup against potential losses on a US$306 billion pool of troubled assets, the Washington Post Web site reported.

Citigroup would absorb the first US$29 billion in any further losses on these assets, which are primarily securities backed by mortgages and commercial real estate loans, with the government stepping in to cover most of the losses beyond that amount. The distressed assets would be fenced off by Citigroup from the rest of its holdings, allowing the firm to insulate itself from the fallout.

The U.S. government in return is to receive up to US$7 billion in preferred shares, the report said.

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