The U.S. Department of the Treasury said Friday it plans to sell an additional 1.5 billion shares it holds in Citigroup, Inc. (C) as it continues to reduce its stake in the bank. The Treasury has entered into a third pre-arranged written trading plan under which Morgan Stanley, as Treasury's sales agent, will have discretionary authority to sell the company's common stock under certain parameters.
The Treasury, which currently owns approximately 5.1 billion shares of Citigroup common stock has said that it plans to sell its entire stake in the company by the end of the year.
On July 1, Treasury reported the completion of its sale of a total of approximately 2.6 billion shares of Citigroup common stock across two trading plans with approximately $10.5 billion in gross proceeds. The first tranche, covering a sale of 1.5 billion shares, took place in May, while the second, covering another 1.1 billion shares, concluded in June.
The Treasury received 7.7 billion shares of Citigroup common stock last summer as part of the exchange offers conducted by Citigroup to strengthen its capital base during the financial crisis. It exchanged the $25 billion in preferred stock it received in connection with the bank's participation in the Capital Purchase Program for common shares at a price of $3.25 per common share.
Citigroup was one of the worst hit banks during the subprime crisis and received $45 billion in bailout money. The company repaid $20 billion in stock and debt offering in December 2009. The remaining $25 billion was converted to common equity, which the government is now selling off.
On July 16, Citigroup reported a profit for the second quarter that declined 10% from last year, marking its second consecutive quarter of profit since the subprime crisis. Peers such as Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) also reported earnings that got a boost from lower provision for credit losses.
C is currently trading at $4.02, down $0.07 or 1.77%, on a volume of 215 million shares on the NYSE.
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