For release at4:30 P.M. EDTNovember 4, 2010
The Board's H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks," has been modified to report the funds held as agent by the Federal Reserve Bank of New York (FRBNY) related to the recapitalization plan announced by American International Group, Inc. (AIG) on September 30, 2010. The recapitalization plan, which is expected to close by the end of the first quarter of 2011, is designed to restructure and facilitate repayment of the financial support provided to AIG by the U.S. Department of the Treasury and the FRBNY. Pending the closing of the recapitalization plan, the cash proceeds from certain AIG asset dispositions will be held by the FRBNY as agent.
At the closing of the recapitalization plan, the cash proceeds from certain asset dispositions, most notably the initial public offering of AIA Group Limited (AIA) and the sale of American Life Insurance Company (ALICO), will be used first to repay in full the credit extended to AIG by the FRBNY under the revolving credit facility (AIG loan) and then to retire a portion of the FRBNY's preferred interests in AIA Aurora LLC and ALICO Holdings LLC (preferred interests) taken earlier by the FRBNY in satisfaction of a portion of the AIG loan. Alternatively, if the recapitalization plan is terminated under the terms of the plan, then the proceeds from the initial public offering of AIA and the sale of ALICO will be used to redeem the preferred interests in accordance with the AIA Aurora LLC and ALICO Holdings LLC limited liability company agreements, and any excess proceeds from these transactions, as well as proceeds from the disposition of other assets, will be used to repay the AIG loan.
The FRBNY began to hold as agent funds from the cash proceeds from the initial public offering of AIA on October 29, 2010, and from the cash proceeds from the sale of ALICO on November 1, 2010.
The funds held by the FRBNY as agent from the disposition of the AIG assets are reported in table 1 and are included in "Other liabilities and accrued dividends" in table 9 and in table 10.
