The US government on Monday said it has sold off Citigroup Inc. stock to recover $12 billion of the total $45 billion cash investment it made in the company to rescue it from a possible bankruptcy last year.
"By selling all the remaining Citigroup shares on Monday, 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 late night statement.
Citigroup, is headed by Indian American Vikram Pandit.
"With this transaction, we have advanced our goals of recovering TARP funds, protecting the taxpayer, and getting the government out of the business of owning stakes in private companies," he said.
During the financial crisis, the Treasury had invested a total of $45 billion in it and made a $5 billion commitment under the Asset Guarantee Program that was never funded.
The department of the treasury said it priced an underwritten public offering of approximately 2.4 billion shares of Citigroup Inc. common stock at $4.35 per share.
With this offering, the treasury has recovered all of the $45 billion plus approximately $12 billion in profits consisting of dividends, interest and gain on the sale of Citigroup common stock and other securities, read the official statement. James Angel, a finance professor at Georgetown University told Wall Street Journal.
"This is a milestone for the government and for Citigroup. It signals the company has been fully privatised and that their parole is over."
Citi Inc said in a press release that it 'is pleased that the US Department of the Treasury has finalised plans to exit from its remaining holdings of Citigroup common stock.
"We are very appreciative of the support provided by the UST (US Treasury) during the financial crisis."
However, the Wall Street Journal reports, the sale does not yet sever Citis ties to the government, as the Treasury would continue to hold warrants for the banks common stock, and is eligible for an additional $800 million in trust-pre- -ferred securities tied to government guarantees on Citi's debt.
