Riversource, Fidelity may have biggest CIT losses

By Joseph A. Giannone

NEW YORK (Reuters) - RiverSource Investments Inc and Fidelity could face some of the biggest losses from stock holdings in CIT Group Inc if the hard-hit commercial lender declares bankruptcy.

As last-ditch talks this week to secure U.S. government rescue financing for CIT collapsed, escalating fears about a Chapter 11 filing caused some of the company's debt to plunge to 52 cents on the dollar on Thursday.

Common shares in the century-old finance company, already down 91 percent this year, dropped $1.22 to 43 cents.

Yet even the biggest CIT investors would not suffer major losses, analysts said.

"I would guess most of those funds have sold most of their stock by this point," said Morningstar research director Russell Kinnel.

Fitch Ratings and analysts say bankruptcy is the most likely scenario. In that case, CIT debt would be worth as little as 24 cents on the dollar, and shareholders would be wiped out.

RiverSource, a money management unit of Ameriprise Financial Inc, reported holding more than 44.3 million CIT shares at the end of June, giving it an 11.4 percent stake, according to a Securities and Exchange Commission filing.

FMR, a Fidelity company, told the SEC it held 37.4 million CIT shares, or a roughly 10 percent stake, at the end of February. That stake declined to 29.5 million shares, or 7.6 percent, at the end of March.