Citigroup pays dividend again as Fed lifts bar

Citigroup, the global banking organisation which twice had to be bailed out by taxpayers in the United States, is to restart paying dividends to shareholders, two years after suspending the payout.

The bank is the latest US institution to announce it will resume the return of cash to shareholders, following a decision by the Federal Reserve on Friday that the American banking system is no longer in danger.

Citigroup is also rejigging its share structure, giving investors one new share for every 10 they hold. The number of shares ballooned as the company issued several rounds of new stock, including to the US Treasury, while it battled to stay solvent during the credit crisis.

The US Treasury sold the last of its stake in Citigroup at the end of last year, netting a total profit of $12bn (£7.4bn) on its emergency investments in the company in 2008. The dividend will be restarted at one cent per new share.

The Federal Reserve told large banks in early 2009 that they could no longer pay substantial dividends, for fear of damaging the safety and soundness of the banking system. It reversed that position last week.