Citigroup Inc. (C) is desperately seeking the approval of the U.S. Treasury Department and regulators to repay the bailout money it has received from the government for its participation in the Troubled Asset Relief Program (TARP) at the height of the credit crisis last year.

Last week, Bank of America Corp. (BAC) had won an approval to pay back $45 billion of the TARP fund. This has increased the pressure on Citigroup and Wells Fargo & Co. (WFC), both of which have also received significant amount of TARP fund.

Citigroup had received $45 billion of TARP funds last year. Later, around $25 billion of that was converted into common stock that represented around 34% of its stake which is held by taxpayers. Citigroup has remaining $20 billion in TARP fund to repay. The repayment of the TARP fund will free the bank from government involvement in its affairs and pay restrictions.

Last Sunday, the Kuwait Investment Authority (KIA), the country’s sovereign wealth fund, announced that it has sold its entire stake in Citigroup and made a 37% return on its initial investments. The KIA converted all its preferred shares to common shares and sold the stake for $4.1 billion, making a profit of $1.1 billion.

The KIA had invested $3 billion in Citigroup by acquiring the preferred shares in Jan 2008 to help the bank strengthen its capital position when it was hit hard by the subprime-mortgage losses in the U.S. At that time, the KIA had also invested $2 billion in Merrill Lynch, which was bought by Bank of America in 2008.

Prior to the investment by the KIA in Citigroup in Jan 2008, Abu Dhabi Investment Authority (ADIA) had invested $7.5 billion in Citigroup in Nov 2007. The investment was made in return of an 11% dividend till March next year when it has to start buying the bank’s common stock. As per the deal, the units will be converted at a price of not less than $31.83 per share. Incidentally, both KIA and ADIA had been criticized for their investment in Citigroup when the shares plunged with the worsening of the economic crisis.

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