Citigroup Inc., the third-biggest U.S. bank, received regulatory approval to repurchase $1.2 billion of stock as Chief Executive Officer Michael Corbat avoided a misstep that helped bring down his predecessor.
The Federal Reserve authorized the plan as it found that New York-based Citigroup was among U.S. banks that would manage to withstand a severe economic shock across the U.S., Europe and Asia, the company said Thursday in a statement.
Corbat, 52, had sought to avoid a repeat of last year, when the Fed rejected then-CEO Vikram Pandit’s proposal to boost payouts. Corbat’s priority was to convince regulators that Citigroup, which almost collapsed in 2008, could weather an economic crisis rather than seeking increased dividends or share repurchases, according to analysts including Marty Mosby of Guggenheim Partners LLC.
“The management team is focused on de-risking the balance sheet and creating as much safety and soundness as possible,” Mosby said before the announcement. “Regulators want to see them be able to do that before they start to release excess capital.”
Citigroup said it will maintain its quarterly dividend of 1 cent per share.
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