Treasury moves closer to selling Citi stake

By David Ellis, staff writer

NEW YORK ( -- The Treasury Department said Monday it was moving closer to unloading its entire stake in Citigroup, but offered little insight into the timing of the sale.

The U.S. government owns approximately 7.7 billion shares, or about a 27% stake in the New York City-based bank. A Citigroup spokesman declined to comment on the Treasury announcement.

Citigroup shares have surged since the start of the year as investors have gotten more comfortable about the health of the company.

The government officially acquired a controlling interest in Citigroup after pumping $45 billion into the banking giant in the months following the collapse of Lehman Brothers through the Troubled Asset Relief Program, or TARP.

The government subsequently converted a portion of its preferred shares into common stock last summer, giving Treasury control over as much as a third of Citi's outstanding shares.

The government said Monday it could not provide any information on the timing of the sale of Citi shares, adding only that it would take place this year "in an orderly and measured fashion" and that it would be subject to the health of the market.

Such a sale would likely deliver a return to American taxpayers. Earlier this month, Treasury Assistant Secretary Herb Allison testified before a congressional watchdog group and said that Treasury would be able to sell its interest in Citigroup at a profit.

The sale of Treasury's entire stake at Monday's opening price of $4.38 a share would generate nearly $34 billion. That would lead to a profit of approximately $8.7 billion for the government. The government converted its preferred-share stake into common stock when Citi shares were hovering at $3.25.

The government however, would still control warrants in the company, or rights to purchase shares at a future date. Treasury also said Monday that Morgan Stanley (MS, Fortune 500) would serve as its advisor in the sale of the remaining Citigroup shares it owns.

Although Citigroup (C, Fortune 500) stock fell nearly 2% in Monday morning trading, the Treasury announcement was cheered by some on Wall Street. Matt Albrecht of Standard & Poor's boosted his rating of the company's stock to "buy" from "hold", adding that the government could unload its massive stake without placing "undue pressure on the share price."

Citigroup shares have enjoyed a nice rally so far in 2010, gaining more than 25%.

There appears to be a growing sense that the worst is over for the once-embattled bank. Citi reported a decline in credit losses in the fourth quarter of 2009 and set aside less money for bad loans.

Upbeat remarks from Citigroup CEO Vikram Pandit have not hurt either. At a company-sponsored conference earlier this month, Pandit suggested that the firm's Citicorp division, which oversees its investment bank and consumer banking businesses, had the potential to soon deliver profits of $20 billion.

Citigroup will provide the latest update on its performance when it delivers its first-quarter results next month. Analysts currently expect the company to report a profit of just $180 million, according to Thomson Reuters.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,191.37 -195.84 -1.13%
Nasdaq 4,637.99 -43.51 -0.93%
S&P 500 2,002.16 -27.39 -1.35%
Treasuries 1.72 -0.10 -5.53%
Data as of 6:11pm ET
Company Price Change % Change
Apple Inc 115.31 6.17 5.65%
Bank of America Corp... 15.20 -0.43 -2.75%
Yahoo! Inc 46.46 -1.53 -3.19%
Microsoft Corp 41.19 -1.47 -3.45%
Facebook Inc 76.24 0.46 0.61%
Data as of 4:00pm ET


One of the in-flight catalog's vendors wants to buy the company's assets and reinvent it for the Internet age. More

Decades of declining oil production has been reversed since Obama took office, leading to the largest increase in the nation's history. More

Apple just posted the biggest quarterly profit in corporate history and Carl Icahn, one of its biggest investors, still believes the stock is super cheap. More

On demand delivery startup WunWun is expecting its order volume to double by the time they close up shop on Monday. All thanks to a blizzard. More

Orthopedic surgeons take home a median $410,000 in salary and bonus annually. What other great careers from CNNMoney and's list of Best Jobs in America offer hefty paychecks? More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.