U.S. To Use Preset Trading Plan to Exit Citigroup (C) Shares
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A preset trading plan for the U.S. Treasury to sell its 27 percent stake in Citigroup Inc. (NYSE: C) could be unveiled as soon as next month, according to a report on Thursday from Bloomberg citing those familiar with the matter.
The Treasury's plan would lock the agency into a schedule and would issue instructions on how many shares to sell and what price, while easing the concerns that the sales could be based on non-public information.
The bank’s shares have lost 90 percent of their value since 2006 as Citigroup required three separate government bailout loans in 2008 and 2009 to avoid collapsing. The firm has seen more than $100 billion in writedowns and credit losses since 2007.
The program would also be similar to those used by executives to keep themselves from being accused of insider trading.
“What they are looking to do is to optimize taxpayer return while ensuring marker stability,” former Treasury official, Stephen Myrow said.
The sale of the government shares under the plan could be completed this year according to the sources, which would bring Citigroup closer to coming out of the Troubled Asset Relief Program that infused $45 billion total taxpayer dollars into the firm in late 2008.
In September, the Treasury converted $35 billion of the funds put into Citigroup into common shares at $3.25 each, while the bank repaid the remaining $20 billion in December. At that point the government agreed to not sell the shares for 90 days, which expired on March 16.
With shares of Citigroup currently at $4.15 each, the Treasury's stake in the firm has a market value of $31.9 billion. A sale at this price would bring a $6.9 billion profit to the taxpayers on the transaction.
In premarket trade on Thursday, shares of Citigroup are up 3.86 percent to $4.31.
The Treasury's plan would lock the agency into a schedule and would issue instructions on how many shares to sell and what price, while easing the concerns that the sales could be based on non-public information.
The bank’s shares have lost 90 percent of their value since 2006 as Citigroup required three separate government bailout loans in 2008 and 2009 to avoid collapsing. The firm has seen more than $100 billion in writedowns and credit losses since 2007.
The program would also be similar to those used by executives to keep themselves from being accused of insider trading.
“What they are looking to do is to optimize taxpayer return while ensuring marker stability,” former Treasury official, Stephen Myrow said.
The sale of the government shares under the plan could be completed this year according to the sources, which would bring Citigroup closer to coming out of the Troubled Asset Relief Program that infused $45 billion total taxpayer dollars into the firm in late 2008.
In September, the Treasury converted $35 billion of the funds put into Citigroup into common shares at $3.25 each, while the bank repaid the remaining $20 billion in December. At that point the government agreed to not sell the shares for 90 days, which expired on March 16.
With shares of Citigroup currently at $4.15 each, the Treasury's stake in the firm has a market value of $31.9 billion. A sale at this price would bring a $6.9 billion profit to the taxpayers on the transaction.
In premarket trade on Thursday, shares of Citigroup are up 3.86 percent to $4.31.
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