US lender CIT files for bankruptcy
Tuesday, 3 November 2009
WASHINGTON, Nov 2 (AFP): CIT Group, a key lender to small US firms, declared itself bankrupt becoming the fifth largest failure in American history and dealing a new blow to market nerves.
CIT said late Sunday it has agreed a restructuring plan with creditors that will reduce its debt by about 10 billion dollars. But amid doubts about the prospects for the bank and the US economic recovery, Japanese shares fell more than two per cent Monday.
The bankrupt group received an emergency loan of 4.5 billion dollars on October 28 after struggling for months through the fallout of the global financial crisis.
It was also rescued in July after the US government rejected a bailout plea and had received 2.3 billion dollars of taxpayers money in December last year which will now probably be lost.
CIT, like many US banks, hit major problems because of the home mortgage meltdown which briefly crippled the global economy and is still causing major pain. The bankruptcy heightened international doubts about the strength of the US recovery.
Japanese stocks ended 2.31 per cent lower on Monday because of fresh doubts about the sustainability of a US rebound, compounded by CIT's bankruptcy.
Manoj Ladwa, a senior trader at ETX Capital in London, said: "CIT?s bankruptcy is a stark reminder that a full-blown economic recovery is still a long way off. The commercial lending market just got tougher as small businesses will struggle to source funds."
CIT said late Sunday it has agreed a restructuring plan with creditors that will reduce its debt by about 10 billion dollars. But amid doubts about the prospects for the bank and the US economic recovery, Japanese shares fell more than two per cent Monday.
The bankrupt group received an emergency loan of 4.5 billion dollars on October 28 after struggling for months through the fallout of the global financial crisis.
It was also rescued in July after the US government rejected a bailout plea and had received 2.3 billion dollars of taxpayers money in December last year which will now probably be lost.
CIT, like many US banks, hit major problems because of the home mortgage meltdown which briefly crippled the global economy and is still causing major pain. The bankruptcy heightened international doubts about the strength of the US recovery.
Japanese stocks ended 2.31 per cent lower on Monday because of fresh doubts about the sustainability of a US rebound, compounded by CIT's bankruptcy.
Manoj Ladwa, a senior trader at ETX Capital in London, said: "CIT?s bankruptcy is a stark reminder that a full-blown economic recovery is still a long way off. The commercial lending market just got tougher as small businesses will struggle to source funds."