US Treasury to offload $32bn Citigroup stake
Tuesday 30 March 2010
The US government's $32bn stake in the banking giant Citigroup is back on the block and will be sold into the market over the course of this year, the Treasury Department declared yesterday.
The holding – about 27 per cent of the company – is the result of two taxpayer bailouts when the company teetered on the edge of bankruptcy during the financial panic of 2008.
A previous attempt to sell it had to be abandoned following poor demand from investors. But the Treasury said it had hired Morgan Stanley to manage the sale in a way that maximises profits for the taxpayer. The bank's shares have risen steadily in value in recent months, thanks to the improving economic environment, the profit Citigroup can make from borrowing money at near-zero interest rates and lending at higher rates and the management's progress in restructuring the business.
Morgan Stanley is likely to dribble the stock out on to the market over the course of this year, taking care not to dump too much at any one time in a way that could depress the price.
Citigroup's traders made their own attempt to sell the stake on behalf of the government last December, at the same time as carrying out a massive sale of new shares with which they intended to pay back loans from the Treasury as well.
Although Citigroup managed to raise $20.5bn for itself, its shares fell by one fifth and the government balked at selling its stake at a loss.
At today's prices, the government is sitting on a paper profit of a little over $7bn. Its original investment was a loan of $25bn in October 2008, but that was converted into equity after Citigroup needed a second cash infusion at the end of that year.
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
Husband and wife die holding hands within hours of each other after 67 years of marriage
Mohammed Emwazi: Nine things we know about Isis militant 'Jihadi John'
What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Madonna claims jokes about her age tantamount to racism: 'No one would dare to say a degrading remark about being black'
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...