Pedestrians walk by?a branch?of US bank Citigroup in New York on November 17, 2008. Citigroup said it would cut 20 percent of its global workforce, or some 53,000 jobs, as the US banking giant struggles with the global financial crisis and four consecutive quarterly losses. [Xinhua]

The U.S. government agreed Sunday to rescue Citigroup providing a package of guarantees, liquidity access and capital.

The U.S. government would protect US$306 billion of loans and securities on Citigroup Inc.'s books against losses and inject US$20 billion into the bank from the Treasury's US$700-billion Troubled Asset Relief Program.

In a joint statement released late Sunday night, the U.S. Treasury, the Federal Reserve and Federal Deposit Insurance Corp. (FDIC) committed to supporting financial market stability, which is a prerequisite to restoring vigorous economic growth.

"As part of the agreement, Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately US$306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup’s balance sheet," said the statement.

As a fee for the arrangement, Citigroup will issue preferred shares to the Treasury and FDIC.

In addition, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.

In exchange for the government's US$20-billion injection, Citigroup would offer preferred stock with an 8 percent dividend to the Treasury.

According to the agreement, Citigroup will comply with enhanced executive compensation restrictions and implement the FDIC’s mortgage modification program.

"With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy," added the statement.

Citigroup lost 60 percent of its market value last week as investors worried the risky debt on Citigroup's balance sheet will turn into losses.

(Xinhua News Agency November 24, 2008)