Governments Get a SWF Financial Kick

Funds run by rich states such as Abu Dhabi and Singapore are investing in big banks--and worrying the West

Illustration for TIME by Peter and Maria Hoey

To banks and other financial-services companies starved for cash by the subprime-credit crises, where they obtain bailout money is less important than the fact that it's available at all. Just ask investors in Citigroup or UBS. The big Swiss bank had to take a $10 billion write-down--it had already taken a $4.4 billion hit--on the value of its "super-senior" subprime portfolio, those formerly top-rated bonds. To restore its capital base, UBS sold $8.9 billion in convertible notes to the Government of Singapore Investment Corp. (GIC) and an additional $1.8 billion to a mystery Middle East investor.

In other words, up to 12.4% of a conservative Swiss...

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