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The U.S. Government is considering the conversion into ordinary shares of the subsidies for the biggest 19 financial groups in the U.S.
The state will take the majority shareholdings of more credit institutions, according to the New York Times. The conversion of loans into shares would help transform the state subsidies in capital at the disposal of the financial institutions, said sources inside the U.S. presidential administration.The banks should provide those funds, but the measure is considered a nationalization by the Obama administration, as it would lead to state takeover of the majority package of shares of several financial institutions.
The U.S. Treasury announced at the end of February that it would convert into equity preferential shares from Citigroup worth 25 billion dollars. Citigroup received a state subsidy worth 45 billion dollars in October. The participation of the U.S. Government at Citigroup could reach 36% if the Treasury chooses to convert the loan into ordinary shares.
While the U.S. make nationalization plans, Europe foresees signs of economic strengthening. "The resumption of the economic growth could take place in 2010, but it depends on the problem of toxic assets in the banks' portfolios", said Jean-Claude Juncker, Eurogroup President. This is the organization that brings together the finance ministers in the euro area.
Translated by Sorin Bălan
