LONDON (MarketWatch) -- Citigroup Inc. said it got a $7.5 billion injection from the Abu Dhabi Investment Authority, a much-needed shot in the arm as the financial-services giant weighs cutting more jobs and slashing the value of debt securities on its balance sheet.
The deal eased concern among some analysts that the bank would have to cut its dividend to maintain important capital levels. It also boosted confidence by showing that a major investor is willing to back Citi.
"The dividend in my view is well protected," Dick Bove, an analyst at Punk Ziegel & Co., wrote in a note to clients on Tuesday. "The sale indicates active interest among pools of money to invest in this company." He upgraded the stock to buy from market perform.
Still, other analysts remained worried, noting that Citi may still have to sell assets and raise more capital next year.
"Further capital raises and balance sheet actions may be necessary in 2008, as balance sheet risks linger," John McDonald, an analyst at Banc of America Securities, wrote in a note to investors.
Citigroup's shares rose 1.7% to close at $30.32 on Tuesday. The stock, which dropped below $30 for the first time in more than five years on Monday, has lost 40% of its value this year. The deal also helped lift the broader stock market. See full story.
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