US govt to offload 1.5 bn Citi shares in first tranche

NEW YORK: The US government will initially sell as much as 1.5 billion shares of Citigroup, as part of its gradual exit from the banking behemoth.

The US treasury department acquired about 27 per cent stake in the Vikram Pandit-led banking major in exchange for pumping in billions of dollars, to help Citigroup tide over the financial turmoil. Currently, the treasury holds nearly 7.7 billion shares of Citigroup.

In a statement on Monday, the treasury said it would start offloading its common shares in the market under a pre-arranged written trading plan. The sales agent for the transaction is Morgan Stanley. "Initially, the treasury will provide Morgan Stanley with discretionary authority to sell up to 1.5 billion shares under certain parameters. The treasury expects to provide Morgan Stanley with authority to sell additional shares after this initial amount," it added.



In the wake of the ravaging financial crisis, Citigroup had received taxpayers' money worth $45 billion. The treasury had exchanged the $25 billion in preferred stock of Citigroup for common shares at a price of $3.25 per common share.

"These sales do not cover the treasury's holdings of Citigroup Trust's preferred securities or warrants for its common stock, which will be disposed of separately," the statement noted.

For the proposed sale, the treasury has filed a prospectus supplement with Securities and Exchange Commission.

Citigroup posted a nearly threefold jump in profit at $4.43 billion for the first quarter of 2010, primarily bolstered by good business performance and lower expenses.