Citigroup Well Capitalized, Needs No More Aid: Parsons

Citigroup Chairman Richard Parsons said Thursday that the bank does not need any more capital injections from the government and expressed confidence that Citi would remain in private hands.

Asked in an interview with Reuters whether Citigroup needed additional government capital injections, Parsons said: "No, I think actually, particularly with the latest conversion... Citi is actually one of the better capitalized banks in the world.''

Parsons was speaking on the sidelines of a Business Roundtable event where President Barack Obama addressed business executives.

The Citigroup leader also brushed aside any prospect of the U.S. government nationalizing the bank.

"I don't think the administration is heading in that direction,'' Parsons said. "But I have a lot of confidence in the future viability and strength of a privately held Citi.''

AP Richard Parsons

The Obama administration and regulators including Federal Reserve Chairman Ben Bernanke have said they do not want the government to take full control of the nation's banks.

Citi's shares Thursday closed 13 cents higher, or 8.4 percent, to $1.67 on the New York Stock Exchange. For the first time, Citi shares fell below $1 on March 5.

The U.S. government said last month it would boost its equity stake in Citigroup to as much as 36 percent through the conversion of up to $25 billion in preferred shares to common stock.

In total, Citi has received $45 billion of taxpayer-funded capital since October. This marked the third attempt by the U.S. authorities to prop up Citigroup in the past five months.

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Citigroup is among many financial institutions that have received government bailout money to shore up their capital in a U.S. economy stuck in a recession during the credit crisis.

Earlier this week Citi said it was profitable in the first two months of 2009 and is confident about its capital strength, easing concerns about the bank's survival prospects.

As a precautionary measure U.S. regulators recently began work on a contingency plan to stabilize Citigroup if problems mounted, but no imminent rescue was planned, a person familiar with the planning said Tuesday. The person declined to be named due to the sensitivity of the discussions.

Citi and other banks are waiting for the U.S. government to announce a plan to absorb soured assets banks are holding on their balance sheet.

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Separately, Citi is preparing to nominate four new members to its board, including former U.S. Bancorp chief executive Jerry Grundhofer, as soon as next week, according to the Wall Street
Journal.

Citi may also name Michael O'Neill, former CEO of Bank of Hawaii and William Thompson, former co-head of Pimco, the paper said in story on its Website, citing people familiar with the matter.

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