Gov't plans to sell 2.4B shares of Citigroup stock# Stock
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(AP) -- The government said Monday that it will sell its remaining shares of
Citigroup common stock and expects to turn a profit on its $45 billion
bailout of the giant bank.
The Treasury Department said that it will sell approximately 2.4 billion
shares of Citigroup Inc. common stock. The sale would begin immediately and
would end when the government determined that it had received an acceptable
price for the shares.
Citigroup received $45 billion in taxpayer support in one of the largest
bank rescues by the government.
Of the $45 billion in taxpayer support provided to Citigroup, $25 billion
was converted to a government ownership stake that the Treasury has been
selling off since last spring. The bank repaid the other $20 billion in
December 2009.
Treasury had sold 5.3 billion shares of common stock before Monday's
announcement. The planned sale of the additional 2.4 billion shares would
complete the sale of Treasury's holdings of Citigroup common stock.
Treasury announced that at the end of October it had realized $42.8 billion
in total proceeds from its Citicorp investments, including sales of common
stock and interest and dividend earnings.
However, that total did not take into account 900 million additional shares
of common stock that have been sold in recent weeks. While Treasury has not
publicly released a figure for its earnings on those sales, a ballpark
estimate brings the amount received for those shares to $3.6 billion.
When that $3.6 billion is added to the $42.8 billion that Treasury has
announced receiving, it brings the total return to the government to $46.4
billion. That means the government is now in the black on the $45 billion in
support provided to Citi from the $700 billion Troubled Asset Relief
Program.
The ultimate earnings for taxpayers will rise further when the sales of the
final 2.4 billion shares of Citigroup common stock are included.
"Selling off the remaining stake ensures that taxpayers will book a healthy
profit on the Citigroup investment," said Linus Wilson, a professor of
finance at the University of Louisiana at Lafayette.
In addition to the common stock, Treasury still holds Citigroup warrants
that it has yet to sell. Those warrants give the holder the right to buy
Citigroup common stock at a specified amount. Treasury is also entitled to
receive up to an additional $800 million for the trust preferred shares of
the bank that it owns.
Citigroup common stock closed at $4.45 in trading Monday and has ranged from
a low of $3.11 to a high of $5.07 over the past 52 weeks.
Last week, Treasury announced it had received an additional $1.8 billion in
net proceeds from the sale of General Motors stock, bringing the total it
has received from an initial public offering of GM stock to $13.5 billion.
The government put $49.5 billion into GM as part of its bailout of the giant
automaker.
Republicans have sharply criticized the Obama administration for the way it
has handled the $700 billion bailout program. But administration officials
contend that without the support provided to banks, auto companies and
insurance giant American International Group, the recession would have been
even more severe.
Citigroup common stock and expects to turn a profit on its $45 billion
bailout of the giant bank.
The Treasury Department said that it will sell approximately 2.4 billion
shares of Citigroup Inc. common stock. The sale would begin immediately and
would end when the government determined that it had received an acceptable
price for the shares.
Citigroup received $45 billion in taxpayer support in one of the largest
bank rescues by the government.
Of the $45 billion in taxpayer support provided to Citigroup, $25 billion
was converted to a government ownership stake that the Treasury has been
selling off since last spring. The bank repaid the other $20 billion in
December 2009.
Treasury had sold 5.3 billion shares of common stock before Monday's
announcement. The planned sale of the additional 2.4 billion shares would
complete the sale of Treasury's holdings of Citigroup common stock.
Treasury announced that at the end of October it had realized $42.8 billion
in total proceeds from its Citicorp investments, including sales of common
stock and interest and dividend earnings.
However, that total did not take into account 900 million additional shares
of common stock that have been sold in recent weeks. While Treasury has not
publicly released a figure for its earnings on those sales, a ballpark
estimate brings the amount received for those shares to $3.6 billion.
When that $3.6 billion is added to the $42.8 billion that Treasury has
announced receiving, it brings the total return to the government to $46.4
billion. That means the government is now in the black on the $45 billion in
support provided to Citi from the $700 billion Troubled Asset Relief
Program.
The ultimate earnings for taxpayers will rise further when the sales of the
final 2.4 billion shares of Citigroup common stock are included.
"Selling off the remaining stake ensures that taxpayers will book a healthy
profit on the Citigroup investment," said Linus Wilson, a professor of
finance at the University of Louisiana at Lafayette.
In addition to the common stock, Treasury still holds Citigroup warrants
that it has yet to sell. Those warrants give the holder the right to buy
Citigroup common stock at a specified amount. Treasury is also entitled to
receive up to an additional $800 million for the trust preferred shares of
the bank that it owns.
Citigroup common stock closed at $4.45 in trading Monday and has ranged from
a low of $3.11 to a high of $5.07 over the past 52 weeks.
Last week, Treasury announced it had received an additional $1.8 billion in
net proceeds from the sale of General Motors stock, bringing the total it
has received from an initial public offering of GM stock to $13.5 billion.
The government put $49.5 billion into GM as part of its bailout of the giant
automaker.
Republicans have sharply criticized the Obama administration for the way it
has handled the $700 billion bailout program. But administration officials
contend that without the support provided to banks, auto companies and
insurance giant American International Group, the recession would have been
even more severe.