Treasury to sell 1.5 billion Citi shares

NEW YORK (CNNMoney.com) -- The federal government took its first step towards unloading its remaining stake in Citigroup, unveiling plans Monday to sell up to 1.5 billion shares in the banking giant.

The U.S. government currently owns approximately 7.7 billion shares, or about a 27% stake in the New York City-based bank. A sale of the 1.5 billion shares would cut the government's holdings to just under 22%.

The sale of the 1.5 billion shares would likely generate a return for American taxpayers, based on where Citi stock has been trading recently.

Selling the stock at Friday's closing price of $4.86 would lead to a profit of approximately $2.4 billion. The government converted its preferred-share stake into common stock when Citi shares were hovering at $3.25.

The Treasury Department said Morgan Stanley, its advisor in the deal, would exercise discretion on when the shares actually hit the market.

U.S. taxpayers officially acquired a controlling interest in Citigroup after the Treasury Department pumped $45 billion into the company through the Troubled Asset Relief Program, or TARP.

To boost Citi's health even further, 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.

Citigroup (C, Fortune 500) shares edged lower in pre-market trading Monday.