Citi sells 5.4 billion shares to raise $20 billion for TARP repayment
17 Dec 2009
Citigroup Inc, the last of the four largest US banks that sought funds to exit a taxpayer bailout, raised $17 billion on sale of stock at prices so low that the US government put off a planned divestment of its stake in the lender.
The bank sold 5.4 billion shares at $3.15 apiece, which is lower than the $3.25 the government paid in September for acquisition of its stake. According to the New York-based bank, the Treasury would hold its shares for at least 90 days.
Investors demanded a bigger discount on Citigroup's shares than Bank of America Corp or Wells Fargo & Co. The two lenders had together raised more that which than $31 billion this month to exit the Troubled Asset Relief Programme (TARP). Wells Fargo, which beat Citigroup bid to take over Wachovia Corp last year, completed a $12.25 billion share sale on 15 December while JPMorgan Chase & Co repaid $25 billion in June.
According to market analysts, Citigroup needed to show steps to reinstall is quality.
With the sale, Citigroup's common shares outstanding increased to 28.3 billion. That's up from 22.9 billion as of 30 September.
President Barack Obama called CEOs of major banks to a meeting at the White House on Monday to press them to lend more and support his overhaul of financial regulation. He called on banks that benefited from taxpayer bailouts, to do their bit to help recovery.
Though Obama failed to extract any concrete promises on the issues he raised both Obama and the bankers called the meeting productive.
