Reply #3: 40%, for now. [View All]

[girl gone mad]

Assuming the government would convert the full $45B into common for a 40% stake in Citi common, that would value the entire common equity at about $112B. Subtract the government's $45 billion out and you are left with a valuation of $67 billion for current shareholders. Divide that by roughly 5.5 billion outstanding shares (estimate), I come out with a pps of over $12 per share. I don't believe that a share of citi is worth that or that it will trade to that price, but my math says that is the value if the details are as such. The equity does become instantly more valuable without the overhang of $45 billion of quasi debt (preferred shares), and what would become something of a government guarantee of survival. The interest expense savings would also be very helpful to capital levels.

It's good for them, bad for us. They can hang on for a while longer.