Treasury to sell Citigroup shares

US government announces plan to sell bank shares bought as part of 2009 bailout.

    Under the terms of the bailout the US government owns around a quarter of Citigroup [EPA]

    The government received about 7.7 billion shares, or a 27 per cent ownership stake, as compensation for the massive support it extended to the bank during the height of the financial crisis in 2008.

    The sales should earn a profit for the government, which purchased the common stock in 2009 at a share price of $3.25.

    If the government sold all its 7.7 billion shares at $4.70, it would receive about $36.2bn in proceeds - $11.2bn above the $25bn it originally paid for the shares.

    Bank bailout

    The announcement comes as Washington tries to draw back the $700bn of taxpayers' money used to prevent the collapse of the global financial system in 2008.

    At the height of the crisis, the government injected a total of $45bn into Citigroup.

    The New York-based company faced massive losses in the wake of the mortgage crisis and despite repaying some $20bn to the authorities in December, Citigroup is still one of the last of the major banks operating in the shadow of a US government bailout.

    Last week the bank announced that it had returned to profit after two years spent largely in the red, posting a profit of $4.4bn in the first quarter of this year.

    SOURCE: Agencies


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