The U.S. Treasury will sell all its 7.7 billion common shares in Citigroup throughout 2010 “subject to market conditions” – likely resulting in the largest profit from the government’s bailout program.
Treasury said it intends to sells its 27 percent stake in Citigroup “through various means in an orderly and measured fashion.” It will be done so according to a “pre-arranged written trading plan.”
It did not elaborate on the plan.
Based on Citigroup’s closing price on Friday, Treasury would see a profit of more than $8 billion.
Citigroup received $45 billion in 2008 under the government’s $700 billion Troubled Asset Relief Program, TARP.
An agreement in June 2009 between Treasury and Citigroup provided for the exchange into common shares of preferred stock purchased as part of Citigroup’s participation in the bailout facility, Capital Purchase Program.
In September, the Treasury converted $25 billion of the bailout funds into common shares at a price of $3.25 each.
In December, Citigroup became the last major banking institution to repay its bailout in full. Citigroup repaid $20 billion, and the Treasury agreed to hold off selling common shares until March.16.
The announced sale today won’t affect remaining trust preferred securities and warrants for Citigroup common stock held by the Treasury.
Treasury has retained Morgan Stanley as its capital markets advisor in connection with its Citigroup position.
In a statement announcing Citigroup’s TARP repayment in December, Citi Chief Executive Officer Vikram Pandit thanked American taxpayers.
“As I have stated many times over the past year, we planned to exit TARP only when we were convinced that it was prudent to do so,” Pandit said. “By any measure of financial strength, Citi is among the strongest banks in the industry, and we are in a position to support the economic recovery.”
