The Treasury Department said Monday that it plans to sell up to 1.5 billion shares of Citigroup stock, its latest move to unwind the support it provided big banks during the financial crisis.
The sales would amount to about 20 percent of the 7.7 billion shares of Citigroup common stock that the government owns.
It received the shares as compensation for the massive support it extended to the bank during the height of the financial crisis in late 2008.
In a statement Monday, Treasury said it planned to proceed with the sales of the Citigroup common stock “in an orderly fashion under a pre-arranged trading plan with Morgan Stanley, Treasury’s sales agent.”
Treasury did not disclose in its brief announcement exactly when the initial stock sales would begin or how long the sales would last. In a separate filing with the Securities and Exchange Commission, the company said it would report quarterly on the number of shares sold.
Treasury said Morgan Stanley had the authority to make the initial sales “under certain parameters” and that Treasury expected to give the company the authority to sell additional shares after the initial 1.5 billion shares had been sold.
Other large banks such as Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo have repaid the money Treasury provided them under the $700 billion Troubled Asset Relief Program, or TARP.
“We’re putting TARP out of its misery,” said Treasury Secretary Timothy Geithner on a television interview Sunday.
The sales of Citigroup shares should earn a tidy profit for the government, which purchased the common stock in the summer of 2009 at a share price of $3.25 a share. Citigroup shares fell 15 cents, or 3.1 percent, to $4.71 in morning trading Monday.
At the moment, the Treasury owns 27 percent of the company in return for an investment of $25 billion.
Treasury had announced last month that it would soon begin sales of its Citigroup stock and planned to sell the shares over the course of this year.
Citi, one of the hardest-hit banks during the financial crisis and Great Recession, received a total of $45 billion in bailout money. That was one of the largest rescues under the goverment’s $700 billion bailout fund, known as the Troubled Asset Relief Program.
Of the $45 billion, $25 billion was converted to a government ownership stake in Citi last summer and the bank repaid the other $20 billion in December.
Source: The Associated Press.