Treasury Divests Ownership Stake in Citi with $10.5B Stock Sale

The ""U.S. Treasury Department"":http://www.treasury.gov said late Monday that it priced a public offering of its remaining 2.4 billion shares of ""Citigroup Inc."":http://www.citigroup.com common stock at $4.35 per share,[IMAGE]

bringing the government's ownership of the nation's third largest bank to an end. The deal should yield about $10.5 billion.

""By selling all the remaining Citigroup shares today, we had an opportunity to lock in substantial profits for the taxpayer and avoid future risk,"" Tim Massad, acting assistant secretary for financial stability, said in a statement.

""With this transaction, we have advanced our goals of recovering TARP [Troubled Asset Relief Program] funds, protecting the taxpayer, and getting the government out

[COLUMN_BREAK]

of the business of owning stakes in private companies,"" Massad said.

Treasury expects to reap total proceeds of $57 billion from its $45 billion investment in Citigroup, netting a tidy $12 billion profit for taxpayers.

Overall earnings should ultimately go even higher with the sale of stock warrants the Treasury still holds and the sale of $800 million in trust preferred securities (TruPS) held by the FDIC for Treasury.

Citigroup initially relinquished preferred stock in exchange for the $45 billion bailout it received from the federal government in late 2008. Treasury restructured the package in July 2009 to help Citi strengthen its capital base and exchanged $25 billion of the company's preferred stock for 7.7 billion shares of common stock at a price of $3.25 per share.

Treasury had already disposed of approximately 5.3 billion shares to date. With this final transaction, Treasury's average per-share selling price is $4.14. Citigroup's stock closed at $4.45 on Monday.

The transaction announced by Treasury Monday evening is being managed by ""Morgan Stanley"":http://www.morganstanley.com and is expected to close by the end of this week.

According to a statement from the Treasury Department, the total amount of TARP funds returned to taxpayers now exceeds $261 billion.