Davis Polk advises Citigroup on US government bailout

Davis Polk & Wardwell has scored another credit crunch-related mandate, advising US bank Citigroup on its $20bn (£13.4bn) government bailout.

Davis Polk partners Gar Bason, Randall Guynn, Louis Goldberg and Avishai Shachar are leading the team acting for the bank. Cleary Gottlieb Steen & Hamilton is advising the US Treasury on the deal.

The move comes after Citigroup's share price fell by 60 per cent last week, leaving it with a market value of around $20bn.

Under the deal the US Treasury will invest $20bn in the bank's preferred stock as part of the Treasury's Troubled Asset Relief Program. Citi will issue stock to the US Treasury in increments of $7bn (£4.7bn) as payment for a government guarantee on $306bn (£205bn) of securities and loans.

Davis Polk has won a number of mandates that have come out of the financial crisis. Earlier this year partners Marshall Huebner and Bradley Smith led a team advising the US Treasury on the bailout of beleaguered insurance company AIG.

Earlier this year The Lawyer reported on managing partner John Ettinger advising Citigroup on its failed approach to US bank Wachovia (6 October 2008).

Cleary Gottlieb managing partner Mark Walker and partners Ray Check and Kimberly Blacklow are advising the New York Fed on the funding.

Cravath Swaine & Moore partners Bob Joffe and Allen Finkelson are representing Citi's board of directors.