Treasury to start selling Citi shares
NEW YORK
The government received 7.7 billion shares of Citigroup in
exchange for $25 billion it gave the bank during the 2008 credit
crisis. It said it will sell the shares over the course of this
year, depending on market conditions.
Like any investor, the government will likely hold on to its
shares if prices fall steeply. However, Citi shares have steadily
been rising with the broader market in recent months, which means
the Treasury Department stands to pocket a hefty profit.
Citi shares rose 8 cents to $4.39 in early trading Monday. The
government would make about $8.8 billion in profit on its stake in
Citigroup if it sells the stock for $4.39 a share.
The Treasury Department received its stock for a price of $3.25
a share last year.
Citi was one of the hardest hit banks during the credit crisis
and recession. It received a total of $45 billion in bailout money.
Citi repaid the other $20 billion it owed the Treasury in December.
When Citigroup agreed to repay the $20 billion in loans it still
owed the Treasury Department, the pair also agreed the Treasury
would sell the common stock it owned in the New York bank
throughout 2010.
The Treasury owns about 27 percent of Citigroup's outstanding
stock, based on the number of shares that were outstanding on Jan.
31.
Even after it sells its stake in Citigroup, the Treasury
Department will still hold warrants to purchase future shares in
the bank.
The Treasury said Morgan Stanley will handle the sale of the
shares.