Blackstone Profits From Regulation With Citigroup Deal
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Blackstone Group LP, the world’s largest private-equity firm, has devised a way to profit from regulation: It’s helping banks meet tougher capital rules without the pain of selling assets or raising equity.
The firm last year insured Citigroup Inc. against any initial losses on a $1.2 billion pool of shipping loans, said two people with knowledge of the transaction, who asked not to be identified because the matter is private. The regulatory capital trade, Blackstone’s first, will let Citigroup cut how much it sets aside to cover defaults by as much as 96 percent, while keeping the loans on its balance sheet, the people said.