US ex­its Cit­i­group stake and earns $12b profit

The Pak Banker - - International3 -

WASHINGTON: The U.S. govern­ment sold off its re­main­ing shares in Cit­i­group Inc on Mon­day for $4.35 each, mark­ing an exit from own­er­ship in the bailed-out bank­ing gi­ant with a $12 bil­lion gross profit for tax­pay­ers.

The U.S. Trea­sury said it will take in $10.5 bil­lion in sale pro­ceeds from a pub­lic of­fer­ing of 2.4 bil­lion Cit­i­group shares, an­nounced just hours ear­lier. The price is 10 cents be­low the $4.45 clos­ing price on the New York Stock Ex­change.

"By sell­ing all the re­main­ing Cit­i­group shares to­day, we had an op­por­tu­nity to lock in sub­stan­tial prof­its for the tax­payer and avoid fu­ture risk," said Tim Mas­sad, Trea­sury act­ing as­sis­tant sec­re­tary for fi­nan­cial sta­bil­ity.

"With this trans­ac­tion, we have ad­vanced our goals of re­cov­er­ing TARP funds, pro­tect­ing the tax­payer, and get­ting the govern­ment out of the busi­ness of own­ing stakes in pri­vate com­pa­nies," Mas­sad added in a state­ment.

The Trea­sury in­vested a to­tal of $45 bil­lion to bail out Cit­i­group in 2008 and 2009 dur­ing the fi­nan­cial cri­sis. The com­pany paid back $20 bil­lion in pre­ferred stock, while an­other $25 bil­lion was con­verted to 7.7 bil­lion com­mon shares held by the Trea­sury.

It had whit­tled that stake down over the past year from 27 per­cent to less than 7 per­cent through con­trolled sales in the mar­ket.

The move to sell the re­main­ing shares in one large of­fer­ing fol­lows last month's suc­cess­ful ini­tial pub­lic of­fer­ing in Gen­eral Mo­tors Corp, which sig­nif­i­cantly re­duced the govern­ment's stake. The GM IPO at­tracted strong in­ter­est from do­mes­tic in­sti­tu­tional in­vestors and for­eign sov­er­eign wealth funds alike. "Citi is pleased that the U.S. Depart­ment of the Trea­sury has fi­nal­ized plans to exit from its re­main­ing hold­ings of Cit­i­group com­mon stock. We are very ap­pre­cia­tive of the sup­port pro­vided by the Trea­sury dur­ing the fi­nan­cial cri­sis," Cit­i­group spokesman Jon Diat said in a state­ment. -Reuters

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