The U.S. Treasury Department plans
to sell the government’s 27 per cent stake in Citigroup Inc. this year in what
could become the biggest profit for the bank bailout programme.
The Treasury will dispose of its
7.7 billion common shares of New York-based Citigroup over the course of 2010
using a “pre-arranged written trading plan,” the agency said in a statement.
The Treasury’s stake — the biggest of any common shareholder — had a market
value of $33.2 billion as of last week’s closing price, for a paper profit of
The sale would finish the recovery
of $45 billion given to Citigroup from the Troubled Asset Relief Program and
bring the Treasury closer to President Barack Obama’s goal of recouping “every
single dime” of taxpayer money put into the bank rescue fund. Citigroup, ranked
third by assets among U.S. lenders, took infusions from the $700 billion TARP
fund in late 2008 as waning confidence almost triggered a run by depositors.
“This is clearly a positive
development for both the company and for the government and taxpayers,” said
Richard Staite, a London-based analyst at Atlantic Equities LLP. Citigroup and
its industry will benefit if they’re “able to show that the government
investments through TARP did generate profits for the taxpayer.”
The Treasury hasn’t made any
projections about profits from the sale, which will be an “at-the-market
offering,” Meg Reilly, a spokeswoman for the Treasury, said in an e-mail.
Morgan Stanley is advising the Treasury on the sale, and the contract with
terms of the agreement will be posted within 48 hours, Reilly wrote.