Page last updated at 20:35 GMT, Monday, 20 July 2009 21:35 UK

Troubled CIT 'gets rescue deal'

CIT branch
CIT provides funding for small and medium-sized firms

Troubled US bank CIT has approved a $3bn (£1.8bn) loan from shareholders to keep it out of bankruptcy, reports say.

The emergency financing is aimed at giving the firm time to restructure some of its debt payments, The New York Times and the Wall Street Journal said.

Its shares jumped on the news, closing up 79%, but still only 10% of their peak value in the past 12 months.

The US government has said it will not offer a bail-out to CIT - which lends to small and medium-sized businesses.

Last week, shares in CIT plunged as analysts warned that investors should brace themselves for the bank's collapse - though they later rallied on news of the rescue talks.

Business support

Fitch and Moody's - the credit ratings agencies - downgraded CIT on Thursday, after it said it was unlikely to receive any more government help.

The US Treasury said that the government needed to "keep the threshold high" for exceptional aid to individual companies.

The failure of CIT would remove a key source of credit for thousands of small and middle-sized US firms, which are already struggling in the recession.

If CIT, founded more than a century ago, went bankrupt it would join Lehman Brothers and Washington Mutual on the list of large financial services companies to collapse since the acceleration of the credit crisis in September last year.

But analysts say that if it did fail, it would be unlikely to have the same impact.



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