WASHINGTON — The Treasury Department announced Monday it plans to sell roughly 7.7 billion Citigroup Inc. common shares this year.
The Treasury received the shares as part of an agreement in 2009 that allowed the government to receive common shares in exchange for preferred stock. The Treasury acquired the preferred stock from Citigroup through the capital purchase program as part of the $700 billion Troubled Asset Relief Program, or Tarp, which helped bail out financial firms during the financial crisis.
Morgan Stanley, another bank that had participated in the capital purchase program, has been retained by Treasury as a capital markets advisor in connection with its Citigroup position.
As of March 24, a Treasury report said its total investment of common stock and warrants in Citigroup is valued at $25 billion. The sale announced Monday won't affect the Treasury's holdings of Citigroup trust preferred securities or warrants for its common stock.
A spokesman from Citigroup couldn't be immediately reached for comment.
If the 7.7 billion shares were sold as of late Friday when Citigroup's closing market price stood at $4.31 a share, it would reap roughly $33.2 billion.
Taxpayers hold about 27% of Citigroup's common stock according to Citigroup Chief Executive Vikram Pandit, who recently testified before the Congressional Oversight Pane' — a five-member committee that was formed to oversee the implementation of Tarp. In his testimony there, Pandit said the company is "well-capitalized" and has no more plans to seek government assistance.
Monday's announcement by Treasury came as no surprise as Treasury officials have previously said the government planned to sell its stake of common shares in 2010.
The Treasury said that it will sell Citigroup common shares into the market "through various means in an orderly and measured fashion" and that "the manner, amount and timing of the sale is dependent upon a number of factors." The Treasury said it would use a "pre-arranged written trading plan," but didn't elaborate further.
Citigroup was among the last major Wall Street firms to pay back Tarp funds in December of last year. It was forced to raise capital, which diluted shareholders' equity, in order to come up with the $20 billion repayment.
Even with that repayment, however, the government still continues to hold common stock and trust preferred securities. Altogether, Citigroup has received a total of $45 billion in government aid from Tarp.