Citigroup takes over Wachovia, B&B nationalised, Fortis Bailed Out over Weekend, Oil Price drops, House rejects US Bailout

Citigroup will take over all the assets and liabilities of Wachovia in a $2.2bn all-stock deal. According to CMA DataVision,
Citigroup's credit default swaps widened to about 416 basis points following the news from 328 basis points on Friday, i..e. it now costs $416,000 a year to protect $10m of Citi-debt, an increased cost of $88K a year. To raise capital, Citigroup will sell $10bn of common stock, and will cut its quarterly dividend in half to 16c a share to preserve capital.

Fortis was part-nationalised by the governments of the Benelux countries, being seen as too big to go under. To save the bank ministers agreed to put up 11.2bn euros ($16.1bn). ECB president Jean-Claude Trichet played a role. As part of the deal, Fortis will have to sell its stake in Dutch bank ABN Amro which is part-took-over last year. Fortis chairman Maurice Lippens will be forced to resign.

Oil dropped below $100 a barrel as fears spread that global economic weakness will drive down demand (November NYMEX futures was trading at $98.70 a barrel), irrespective of the $700bn bailout.

Eurostoxx is now down close to 3000 level, closing 4.69% down at 3008. FTSE dropped 5.3%, to 4818 (3yr low). The lower house of the US congress has rejected the bailout; many members of George W Bush's Republican party were strongly opposed to it (226 against versus 207 for). S&P is down 6.13%.

Also, on Reuters today: "Iceland's government bought a 75 percent stake in Glitnir for 600 million euros ($878 million) after the bank said its funding position had deteriorated due to turmoil on international financial markets".