US bank in warning on bankruptcy

CIT provides funding for small and medium-sized firms

US bank CIT has said it may still have to file for bankruptcy protection if not enough of its bondholders agree to a refinancing plan.

Its comments came despite the bank having secured a $3bn (£1.8bn) rescue loan from bondholders on Monday.

CIT said it still had to meet about $7bn in debts which fall due in the next year, including $1bn in August.

CIT, which specialises in loans to smaller firms, also predicted a second-quarter loss of more than $1.5bn.

The US government has ruled out bailing out the bank.

CIT - which has debts of about $40bn - is seeking to split its profitable operations from the loss-making parts of the business.

CIT's shares jumped 79% on Monday on reports of the $3bn loan deal, but by close of trade on Tuesday its stock had fallen 21.6% to end at 98 cents.