GIC assets off 25 pct, “too early” buying into banks

04Mar09

Lee Kuan Yew admits GIC made a mistake and tries to quell early election buzz.  Interview with Reuters:

Lee said GIC bought “too early” into global banks such as Citigroup (C.N) and UBS (UBSN.VX), which were both hammered by the financial meltdown that quickened in the second half of 2008.

“How could we have known this was the extent of the damage? You look at all the big-name banks that have gone down, misjudged the situation, ruined their careers,” he said.

“When the market fell, we went into UBS and Citi. But we went in too early. That is part of the ride.”

GIC last week converted its $6.88 billion worth of Citigroup preference shares into common stock at a price of S$3.25 a share to shore up the embattled U.S. lender, realising in the process a loss of around half its initial investment. …

He said there would be “no purpose” in holding an election in Singapore before 2011, but the timing of a poll would depend on the health of the global economy.



2 Responses to “GIC assets off 25 pct, “too early” buying into banks”

  1. 1 q

    The article says: GIC last week converted its $6.88 billion worth of Citigroup preference shares into common stock at a price of S$3.25 a share to shore up the embattled U.S. lender, realising in the process a loss of around half its investment.

    Question: why would a conversion from preference shares into common stock cause a realized loss in this case?

  2. 2 leewatch

    Wall Street Journal: Based on Citigroup’s closing price of $1.13 on Wednesday, GIC’s stake would be worth around $2.37 billion. Shares were down 13% to 98 cents midday Thursday.

    In other words, the investment they paid $6.88 billion for last year is now worth less than half of that.



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