Government to Sell Citigroup Stake for $8bn Profit
The US Treasury will sell its 27% stake in Citigroup this year. The Treasury announced this morning that it will sell its 7.7 billion shares, netting an estimated profit of more than $8 billion. BusinessWeek has the story:
The sale would bring Citigroup a step closer to exiting the government’s Troubled Asset Relief Program and the Treasury nearer to President Barack Obama’s goal of recovering “every single dime” of taxpayer money. Citigroup, ranked third by assets among U.S. lenders, took a $45 billion infusion from the $700 billion bank rescue fund in late 2008 as waning confidence in the lender almost triggered a deposit run.
The potential gain from the Citigroup sale announced today would eclipse the amount raised in the auction of TARP warrants tied to Bank of America Corp.’s bailout, which generated $1.57 billion earlier this month. A similar sale of JPMorgan Chase & Co. warrants in December raised $950 million.
The Treasury has received $13.7 billion in interest and dividend payments through its rescue programs, according to a report from the Treasury this month. The eight biggest U.S. banks by assets have all repaid at least part of their TARP funds.
To avoid driving Citi’s stock prices down, the Treasury plans to sell the stock at 8-10% increments. The Treasury itself made more than 400% profit off the stock since buying last year, according to The Hill.