Page last updated at 10:46 GMT, Wednesday, 28 January 2009

Citigroup cancels corporate jet

Citigroup office
Citigroup has taken billions of dollars of public money

Troubled US bank Citigroup has cancelled an order for a new corporate jet after President Barack Obama questioned the wisdom of the purchase.

The White House asked whether buying the jet was the "best use of money at this point" for a bank that took $45bn (31.6bn) of public money last autumn.

The bank made a loss of $8.29bn in the last three months of 2008 and was forced to split into two new firms.

Citigroup ordered the jet before the credit crisis hit the banking sector.

The bank said it had paid a deposit for the plane in 2005.

Reports suggest the jet would have cost $50m.

The pressure placed on Citigroup by the White House comes as part of a concerted effort by the new administration to place tougher conditions on providing state aid.

New US Treasury Secretary Timothy Geithner wants corporate recipients of public money to be more accountable to the government.

In November, the bosses of Chrysler, Ford and General Motors were roundly criticised for flying to Washington in private jets to ask Congress for a bail-out using public funds.

Bail-out

On top of the $45bn bail-out of Citigroup, the government also agreed to guarantee up to $306bn (205bn) of risky loans and securities on the bank's books.

The bank has since been forced to restructure itself dramatically in order to survive the financial crisis.

Earlier this month, it said it would realign itself into two new firms - Citicorp and Citi Holdings.

Citicorp will handle the company's traditional banking work, while Citi Holdings will take on the firm's riskiest investment assets.

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