The potential for changes in the blue-chip Dow Jones industrial average remains high, according to the head of the index's oversight committee, the same day the head of General Motors said bankruptcy had become more likely.
Both GM and Citigroup have needed large infusions of capital from the government to stay alive, and while the automaker edges closer to bankruptcy, Citigroup's capital cushion still remains tenuous.
The chain of events involving GM
Monday, Fritz Henderson, the chief executive officer of GM, said it was more probable the automaker would need to file for bankruptcy in order to restructure, though there was still a chance it could be avoided.
GM might not be the Dow's only casualty, however, as Citigroup
Both companies could face disqualification, said Prestbo, who had no comment on possible replacements for GM or Citi in the average. He did say the removal of global insurer American International Group Inc
The banks we have in (the index) are all pretty diversified but AIG was an insurance company as its primary business and that doesn't exist in the Dow at present, Prestbo said.
Prestbo said that dropping GM and Citi from the 30-stock average the Dow is not a done deal. The events for disqualification have not happened yet, and may not happen, he said.
(Reporting by Rodrigo Campos)