Business lending giant CIT Group appears to be on the brink of bankruptcy after the US government rejected its plea for a fresh bail-out. Shares in the group plunged more than 70% on fears of an imminent collapse.
CIT, which specialises in financing for tens of thousands of small and medium-sized businesses, said late last night it had been informed there would be 'no appreciable likelihood of additional government support being provided over the near term'.
CIT Group said in a statement that its board of directors and management 'are evaluating alternatives' in consultation with its advisers.
The decision not to bail out CIT comes after the US government injected billions of dollars into the banking system and outlined a policy of helping large firms whose failure could lead to a shock to the financial system. The Treasury has provided $2.3 billion to CIT but indicated that no further aid is likely.
A US administration official said the decrease in the level of loans granted by CIT Group over the past year indicated that the firm was not too big to fail. But the US's National Retail Federation said bankruptcy of the major lender could have severe consequences on the retail industry and the US economy.