Citigroup has said it is going ahead with two new lending initiatives worth US$6 billion supported by US government bailout funds.

An initiative to boost municipal letters of credit (L/Cs) is the larger of the two programmes announced by the banking giant.

Municipal support

Citi will provide up to US$4 billion in municipal L/Cs in one initiative, while the other will see US$2 billion earmarked for mortgage originators.

The lending initiative for municipal clients builds on a US$5 billion programme Citi had already approved that provides loans to the public sector for directly funded capital projects such as new buildings and infrastructure.

The L/Cs will be available to local governments, municipal agencies, health care groups and other public sector clients and will be for a tenor of up to three years.

Government support

The New York-based bank says it has now approved US$50.8 billion of lending programmes supported by funds provided under the US government's Troubled Asset Relief Programme (TARP).

The programme was launched last year by the US Treasury Department to help stabilise lending markets thrown into turmoil by the credit crisis.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.