Treasury to Sell Citi Shares Acquired in Bailout

Monday, 29 Mar 2010 09:04 AM

 

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The U.S. Treasury said on Monday it would sell all of the 7.7 billion Citigroup common shares it owns over the course of 2010 under a prearranged written trading plan.

The Treasury, which acquired a 27 percent stake in Citigroup during bailouts of the banking giant in 2008 and 2009, said it would sell the shares into the market "through various means in an orderly and measured fashion."

"Treasury intends to initiate its disposition of the common shares pursuant to a prearranged written trading plan. The manner, amount and timing of the sales under the plan is dependent upon a number of factors," the Treasury said in a statement.

It did not elaborate on the factors it would consider in the sales, nor did it provide any further details of the trading plan, which is subject to market conditions.

A Citigroup spokesman declined to comment on Treasury's announcement The Treasury said it has engaged Morgan Stanley as its capital markets adviser for its Citigroup position.

Citigroup shares were bid at $4.37 in pre-market trade, making the government's stake potentially worth $33.73 billion at that price, which would produce a profit for taxpayers. Uncertainty over the disposition of the government stake has held down the bank's shares as other big financial services firms have rallied over the last year.

Citi received about $45 billion in capital from the Treasury's $700 billion Troubled Asset Relief Program in two tranches during the financial crisis. But in a third bailout in June 2009, the Treasury agreed to swap its preferred shares in Citigroup into about $25 billion worth of common stock to build up the bank's capital cushion.

At the end of last year, Citigroup repaid $20 billion of its bailout funds and ended a $5 billion asset guarantee program to escape special pay restrictions.

The Treasury said the sale plan would not affect the Citigroup trust preferred securities it still owns or its warrants to purchase Citigroup shares, which is a potential source for further profits on the Citi bailout.

U.S. Treasury Secretary Timothy Geithner and other top Treasury officials have repeatedly said they plan to exit their Citi stake "as soon as practicable."

© 2014 Thomson/Reuters. All rights reserved.

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