Monday, December 14, 2009
Citigroup announced that it will repay $20 billion in TARP funds to the government by issuing common stock, thus ending the government's restrictions over compensation. Citigroup is the last major financial services firm under TARP restrictions. Treasury will also make a secondary offering of up to $5 billion of the common shares it owns and plans to sell off the remainder of its 34% stake in the next 6-12 months. That's a lot of Citi shares hitting the market at once.
Vikram Pandit, Chief Executive Officer, said, "The TARP program was designed to provide assistance until banks were in a position to repay it prudently. We are pleased to be able to repay the U.S. government's trust preferred securities and to terminate the loss-sharing agreement. We owe the American taxpayers a debt of gratitude and recognize our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need."
Treasury continues to own warrants for another 464 million shares.