The U.S. Treasury may sell its 27% stake in Citigroup Inc. (C) through a preset trading plan, according to a Bloomberg report. This program may be announced as early as next month.
The plan would bind the government into a schedule of selling its shares. Instructions would be issued by the Treasury on the number of shares to be sold, the timing of the sale and the price. Such efforts are meant to abolish any concern that the sales are based on non-public information.
Citi has been severely hurt by billions in losses and write-downs of problem loans and toxic assets. In 2008, the U.S. government injected $45 billion in bailout funds into the company through the Troubled Asset Relief Program (TARP). Later, in 2009, around $25 billion of that was converted into common stock, representing nearly 34% of its stake held by taxpayers.
On Dec 23, 2009, Citi repaid $20 billion of trust preferred securities held by the U.S. Treasury under the U.S. government’s TARP and exited from the loss-sharing agreement, which covered a specified pool of assets, with the U.S. Treasury, Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Bank of New York.
In connection with the exit from the loss-sharing agreement, $1.8 billion of the approximately $7.1 billion of additional trust preferred securities held by the U.S. Treasury and FDIC was cancelled.
Citi raised capital to fund the repayment of the bailout money through capital raise. The company raised $17 billion through a stock offering and $3.5 billion through a debt offering.
Following these transactions, as of Dec 31, 2009, the U.S. Treasury continued to hold approximately 7.7 billion, or approximately 27%, of Citi’s common stock.
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