The Federal Reserve Board announced last night that it is to lend around US$85 billion to rescue the crumbling insurer American International Group (AIG).
The Fed authorized the Federal Reserve Bank of New York to lend AIG, a Fortune the funds. In return, the federal government will receive a 79.9% stake in the company.
The company was about to file for bankruptcy. With around US$1.1 trillion in assets and 74 million clients in 130 countries, this would have been catastrophic.
An eventual liquidation of the company is most likely, but with the government loan the company won’t have to go through a tumultuous fire sale.
Nedbank has a strategic alliance with AIG, using it as the underwriter of its clients travel insurance.