AIG rescue puts Man Utd deal in doubt
THE US Government has stepped in with an $85bn (£48bn) rescue package for Manchester United sponsor AIG, America’s biggest insurance company, to save it from bankruptcy.
AIG will get an $85bn loan, in return for an 80% public stake in the firm. And the move overnight could leave European champions United looking for a new shirt sponsor.
It’s four-year deal worth £56.5m is the largest in the Premiership.
The rescue follows the collapse of US investment giant Lehman Brothers, which caused share prices to plummet across the world’s financial markets.
Meanwhile, Barclays has reached a deal to buy Lehman’s US investment banking and capital markets businesses.
The $250m deal, which is subject to approval from the bankruptcy court, will make the British bank the third biggest investment bank in the US.
Barclays will also purchase Lehman’s New York headquarters and its two data centres in New Jersey for $1.5bn.
The rescue of AIG – which has a trillion dollars in assets and insures bank loans around the world – prompted a tentative rally on Asian markets.
The board of the US central bank, the Federal Reserve, made its decision about AIG “with the full support of the Treasury Department”, it said in a statement, adding that the secured loan included conditions designed to protect “the interests of the US government and taxpayers”.
US Treasury Secretary Henry Paulson refused to bail out Lehman Brothers, the fourth-largest investment bank in the US, after it filed for bankruptcy protection on Monday.
However, Mr Paulson said he supported the Fed’s move to assist AIG and said the move would protect taxpayers.
“These are challenging times for our financial markets,” he said.
The AIG plan is similar to the way the US Government took control of mortgage giants Fannie Mae and Freddie Mac which were crippled by the US housing crisis.
AIG employs 116,000 people in more than 100 countries including 2,000 in the UK.
It was founded in 1919 in Shanghai and is now based in New York and sells insurance in the UK through Argos and Boots
