US makes $12bn profit on Citigroup sell-off
The US government has sold its remaining shareholding in Citigroup, providing American taxpayers with a $12bn (£7.6bn) profit and raising hopes of better times for a bank that came to epitomise the phrase "too big to fail".
Citi was built into the world's biggest bank by the deal spree of its former boss, Sandy Weill, but was forced to its knees during the credit crunch and received $45bn of cash from the American taxpayer between 2008 and 2009 through the Troubled Asset Relief Programme (Tarp). The support gave the US government a 27 per cent stake in the bank, although it has been gradually reducing this over the past year.
"By selling all the remaining Citigroup shares, we had an opportunity to lock in substantial profits for the taxpayer," said Tim Massad, the acting assistant secretary for financial stability. "We have advanced our goals of recovering Tarp funds, protecting the taxpayer and getting the government out of the business of owning stakes in private companies." Citi described itself as "pleased" to have brought its time as a government-backed entity to a close. The company could now hope to begin paying dividends before too long.
US taxpayers still, however, have exposure to the bank through warrants and preferred securities, and it may take some time before they see any returns through the disposal of these.
The US has gradually been pulling out of other state-supported entities, such as General Motors, and is hoping to offload its stake in the insurer AIG next year.
By contrast, British taxpayers have yet to see any returns on the billions of pounds pumped into Lloyds and the Royal Bank of Scotland to keep those institutions afloat.
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