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The U.S. Treasury Department is moving ahead with a plan to sell off taxpayers' 27 percent ownership stake in ""Citigroup Inc."":http://www.citigroup.com The Wall Street bank was one of the biggest bailout recipients among financial institutions, and[IMAGE]the Treasury's decision to pull out is being viewed by some as a testament to just how far the big lenders have come since the nation's economic crisis came dangerously close to toppling the entire system.
According to a statement issued Monday, the Treasury has given ""Morgan Stanley"":http://www.morganstanley.com, as the Department's acting sales agent, the ""discretionary authority"" to sell up to 1.5 billion shares of Citigroup common stock held by the federal government. Treasury said it expects to provide Morgan Stanley with authority to sell additional shares after this initial amount.
[COLUMN_BREAK]Treasury ""announced last month"":http://dsnews.comarticles/government-to-sell-stake-in-citigroup-2010-03-29 that it plans to fully dispose of its 7.7 billion shares of Citigroup common stock over the course of 2010. The offering announced Monday is the first of that exit strategy. Treasury officials stressed that they ""will begin selling [the] common shares in the market in an orderly fashion under a pre-arranged written trading plan with Morgan Stanley.""
Treasury received the shares of common stock last summer as part of the exchange offers conducted by Citigroup to strengthen its capital base. Treasury exchanged the $25 billion in preferred stock it received from Citi as part of a federal rescue package for common shares at a price of $3.25 per share.
The sales being conducted by Morgan Stanley do not cover Treasury's holdings of Citigroup trust preferred securities or warrants for its common stock, which will be disposed of separately.
Analysts are expecting taxpayers to see a hefty profit from the stock sale, given the recent strides Citi has made in shoring up its finances over the past few months. Last week, ""the bank reported"":http://dsnews.comarticles/citi-releases-q1-earnings-reports-highest-net-income-since-q2-2007-2010-04-19 that it earned more in the first three months of 2010 than it has in nearly three years. Citi posted Q1 net income of $4.4 billion, or $0.15 per diluted share.
CEO Vikram Pandit told investors last week, ""Citi today is fundamentally a very different company from what it was only two years ago.""
