Despite, that CIT Group Inc, on the verge of bankruptcy, could not agree with the Government to provide her with assistance, it is trying to ensure its survival at the expense of the private sector. If the credit institution fails to receive the necessary funds in the near future, it may be bankrupt. According to the WSJ, a bankruptcy petition can be filed by the bank in federal court as early as Friday.
Rescue of the drowning – the work of the drowning themselves. This truth has already been felt by the American company CIT Group Inc., which in the near future faces bankruptcy. After the failure of negotiations with the US authorities and the refusal to help, a large lender of small and medium-sized businesses does not intend to give up. He is currently trying to attract private funding.. If the credit institution fails to obtain the necessary funds, will have to file for bankruptcy. According to informed sources of The Wall Street Journal, the company can do it as early as Friday. Will someone drop the can?, which has been providing loans to entrepreneurs for a little more than a century, lifeline or not – Time will tell.
Currently, the bank, due to an acute shortage of liquidity, is trying to get from the private sector from $2 billion to $3 billion in funding. In August, the company will have to repay $1 млрд долгов. CIT bond holders discuss the possibility of exchanging bonds for $5 billion per company's shares, WSJ sources say. As analysts at CreditSights Inc. calculated., to avoid bankruptcy, CIT will need about $6 billion.
On the eve of many enterprises of retail trade and manufacturing sector expressed concern about the fate of CIT and suspended shipments of goods. Business fears losing access to liquidity in the event of, if the bank starts the procedure of voluntary bankruptcy. Supply disruptions are just one indicator of a massive crisis., which could trigger the collapse of CIT, noted in the article.
Recall, that two days earlier CIT Group reported, which does not consider it likely to receive assistance from the state in the near future. But negotiations with representatives of the Us Treasury were almost the last hope of the company.. However, the authorities decided, that state aid will not be able to save the bank from imminent bankruptcy. But CIT Group is one of the main players in the US factoring sector.. Besides, authorities, apparently, tired of saving corporations. At the end of last year, CIT was able to get from the government $2,33 billion. within the framework of the state program to cleanse the banking sector of “toxic assets” (TARP). Later, the authorities extended their helping hand to such giants., as American International Group Inc and Citigroup Inc. That's their strength., And, seems to be, the desire to save the drowning is over. Besides, the U.S. government counted, that CIT is not a backbone organization and is convinced, then its bankruptcy cannot pose a systemic risk.
And while the bank is trying to find ways out of this situation., experts warn, that CIT bankruptcy could become the fourth largest in terms of assets. At the end of the first quarter, CIT's assets were $75,7 billion, obligations – $68,2 billion, including deposits on $3 billion.
Previously reported, that the collapse of citas could jeopardize more 700 manufacturing companies and provoke a crisis for 300 thousand. retail clients. This can lead to an increase in unemployment and a decrease in effective demand in the United States.. Don't forget, then CIT provided loans 950 thousand. companies around the world, mainly small and medium-sized businesses in the field of retail trade and industrial production.
Editorial Board “Finmarket”
