WASHINGTON — The Treasury Department began to sell stakes it holds in seven banks that received bailout funds at the height of the financial crisis, continuing the slow process of winding down the Troubled Asset Relief Program.
Merrill Lynch, Pierce, Fenner & Smith Inc. and Sandler O'Neill, the auction agents, began the public offering at 8:30 a.m. EDT, the Treasury said in a statement. The auction will close at 6:30 p.m. EDT Wednesday.
The offerings, announced last week, are expected to price through a modified Dutch auction, the Treasury said.
More than three years after TARP's launch, the federal government still owns stakes in 343 banks. Most are smaller, community institutions that are unable to fully pay back the government.
To recoup its investments, Treasury said it would auction shares of Ameris Bancorp (ABCB) of Moultrie, Ga.; Farmers Capital Bank Corp. (FFKT) of Frankfort, Ky.; First Capital Bancorp Inc. (FCVA) of Glen Allen, Va.; First Defiance Financial Corp. (FDEF) of Defiance, Ohio; LNB Bancorp Inc. (LNBB) of Lorain, Ohio; Taylor Capital Group Inc. (TAYC) of Rosemont, Ill.; and United Bancorp Inc. (UBMI) of Ann Arbor, Mich.
More announcements on further auctions are expected in the coming weeks. Treasury last month said it plans to sell most of its remaining bank holdings — most likely at a loss on the original investments.
Other institutions will repay Treasury or restructure their investments.
While the remaining individual bank investments will likely show small losses, Treasury has overall — through repayments, dividends and sales — booked a profit on its TARP bank programs. Treasury estimates it will make roughly $20 billion on its combined bank investments.