Yesterday, Citigroup Inc. (C) announced that it repaid $20 billion in bailout money. The company is now free of pay restrictions on its key executives. The pay rule restrictions were a major hindrance for Citi in keeping back its skilled workforce.
Citi had received $45 billion in bailout money from the government for its participation in the Troubled Asset Relief Program (TARP) at the height of the credit crisis last year. Later, around $25 billion of that was converted into common stock, representing nearly 34% of its stake held by taxpayers. Thus the company had $20 billion in bailout money left to repay.
Citi funded this repayment of the bailout money through capital raise. The company raised $17 billion through stock offering and $3.5 billion through debt offering. Citi has also reached an agreement with the U.S. Government and regulators to terminate the $7.1 billion loss-sharing agreement for its toxic assets.
However, the Treasury has postponed its plan to sell $5 billion of its 34% stake in Citi. The Treasury bought the Citi shares at $3.25 each, which is above the company’s stock offering price of $3.15. The Treasury continues to hold warrants to buy Citi common stock issued as part of the TARP investment.
Wells Fargo & Co. (WFC) also announced yesterday that it had repaid $25 billion in bailout money following a $12.25 billion of common stock offering. Earlier in December, Bank of America (BAC) also repaid the entire $45 billion of TARP funds to the Treasury following its $19.3 billion of equity offering recently.
Other major banks that have already paid back their TARP funds to the Treasury include Goldman Sachs (GS), JPMorgan Chase (JPM) and Morgan Stanley (MS).
Read the full analyst report on “C”
Read the full analyst report on “WFC”
Read the full analyst report on “BAC”
Read the full analyst report on “JPM”
Read the full analyst report on “GS”
Read the full analyst report on “MS”
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