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Treasury Dept. to sell its stake in Citigroup acquired during bailout, may make $7.5 BILLION profit

 
Anonymous Coward
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03/29/2010 01:05 PM
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Treasury Dept. to sell its stake in Citigroup acquired during bailout, may make $7.5 BILLION profit
The Treasury Department said Monday it will begin selling the stake it owns in Citigroup Inc., which could result in a profit to the government of about $7.5 billion.

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.

The government has been trying to unravel the investments in made in banks under the $700 billion Troubled Asset Relief Program, or TARP, that came in at the height of the financial crisis. Citi, one of the hardest hit banks during the credit crisis and recession, received a total of $45 billion in bailout money, one of the largest rescues in the program. Of the $45 billion, $25 billion was converted to the government's ownership stake in the bank.

The Treasury paid $3.25 a share for its stake.

New York-based Citi repaid the other $20 billion it owed the government in December.

The Treasury had been planing to sell 20 percent of its stock at the time when Citi was selling new shares late last year. At a price of $3.15 a share, the government would have lost $158.7 million on the sale, so it opted not to participate in the deal at that time but to unload all of its 7.7 billion shares over the course of this year.

Citi shares fell 8 cents to $4.23 in morning trading Monday. The government would make about $7.5 billion in profit on its stake in Citigroup if it sells the stock for that price.

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 Monday that Morgan Stanley will handle the sale of the shares.

Read more: [link to www.nydailynews.com]
Anonymous Coward (OP)
User ID: 928884
United States
03/29/2010 01:08 PM
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Re: Treasury Dept. to sell its stake in Citigroup acquired during bailout, may make $7.5 BILLION profit
Bush was President in 2008.

We need Bush back.
Anonymous Coward
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03/29/2010 09:42 PM
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Re: Treasury Dept. to sell its stake in Citigroup acquired during bailout, may make $7.5 BILLION profit
bump
Anonymous Coward
User ID: 929264
Canada
03/29/2010 09:44 PM
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Re: Treasury Dept. to sell its stake in Citigroup acquired during bailout, may make $7.5 BILLION profit
Yeah sure. If you just forget about those pesky 30 TRILLIONS ++ given to the banks.

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