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U.S. markets recover from steep losses
NEW YORK, Jan. 16 (UPI) -- Two U.S. banking giants are clawing their way out of trouble after fourth quarter reports showed continued strain in the financial sector.
The U.S. government said it would provide up to $138 billion to Bank of America, $20 billion in a new capital infusion to help it acquire Merrill Lynch, which posted losses of $15.31 billion, The Wall Street Journal reported Friday.
The remaining $118 billion will be used to back troubled bank assets.
Citigroup, also reeling, said it would split itself into two businesses, one providing financial services, the other focused on traditional banking, the Journal reported. The financial giant's year ended with an $18.72 billion loss, the company said.
Citigroup will become Citicorp, a bank with a presence in more than 100 countries, and Citi Holdings, an asset management and consumer finance business.
"Our results continued to be depressed by an unprecedented dislocation in capital markets and a weak economy," Citigroup Chief Executive Officer Vikram Pandit said.
Citigroup's shares have dropped 43 percent in January. In the fourth quarter it posted a net loss of $8.29 billion. In 2007, Citigroup lost $9.83 billion.
Earlier this week, Citigroup sold a major share of brokerage firm Smith Barney to Morgan Stanley.
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