The U.S. Treasury Department sold its remaining stock in Citigroup Inc. for $10.5 billion, bringing the country's third-biggest bank a step closer to independence from the government following a $45 billion bailout in 2008.
The Treasury said it disposed of 2.4 billion shares at $4.35 each, compared with yesterday's closing price of $4.45 on the New York Stock Exchange. The sale raises the profit for taxpayers on the rescue to about $12 billion, including the share gain, dividends and proceeds from other securities.
The sale helps Citigroup exit the 2008 bailout, which was provided to keep the New York-based bank from collapsing as its stock sank below $5 and some depositors started withdrawing their money. Citigroup also had to get $301 billion of government guarantees on its riskiest assets, making the bailout the biggest among U.S. banks.
"We're seeing a form of governmental handcuffs being released," Bill Bradway, founder of banking consultant Bradway Research LLC in Framingham, Massachusetts, said before the announcement. "Citi will be basically disentangling itself from direct ownership from the government, and the government is cashing out."
Citigroup shares advanced 15 cents to $4.60 at 12:57 p.m. in New York Stock Exchange composite trading. They rallied 34 percent this year through yesterday, though remain down about 92 percent from their December 2006 high of $56.41. Bank of America Corp., the biggest U.S. bank by assets, has declined 23 percent this year while JPMorgan Chase & Co., the second-biggest, fell about 4 percent.
'Substantial Profits'
"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 the government statement.
The Treasury said its average price for selling 7.7 billion Citigroup shares was $4.14. The government acquired the shares at a conversion price of $3.25. The share increase produced a gain of about $6.85 billion.
The U.S. has been winding down bank-bailout and emergency- lending programs while trying to recoup the money it provided to bolster private companies including General Motors Co. and American International Group Inc.
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