The Treasury Department and Citigroup have begun discussing how to sell the 34 percent stake that the government acquired in the rescue of the bank, according to a Bloomberg report. The Treasury, which owns 7.69 billion common shares after a recent preferred-stock conversion designed to shore up the bank‘s capital, may start unloading the stake as soon as October, one of the people said. It aims to sell the holdings over the next six to eight months, it was reported. A sale may bring CEO Vikram Pandit closer to an exit from the bailout program while allowing the government to claim a profit. Because the New York-based bank’s stock price has gained since $25 billion of bailout funds were exchanged for common shares, the Treasury is sitting on a paper profit of $9.77 billion. The planning is in the early stages, and some transactions may need regulatory approvals, sources said. Under one scenario, the shares would be sold to public investors in blocks over six to eight months. In another, the government may sell a small amount of stock daily or weekly, said the people, who declined to be identified because the talks are private. Under a third option, the shares would be sold at once in a managed offering. Citigroup, the third-biggest U.S. bank, received $52 billion in bailout aid, and a sale of the common stock would leave the Treasury with a $27 billion investment.
Citigate Plans Exit from Bailout Program After Shares Gain
A sale may bring CEO Vikram Pandit closer to an exit from the bailout program while allowing the government to claim a profit.