Treasury reports $12 billion profit on Citi bailout

Los Angeles Times

LOS ANGELES — The U.S. Treasury said late Monday that its $45 billion bailout of banking giant Citigroup Inc. produced a $12 billion profit for taxpayers.

The Treasury said it sold the last of its Citi stock — 2.4 billion shares — to private investors at $4.35 apiece, raising $10.5 billion.

Combined with proceeds from previous Citi stock sales as well as dividend and interest income paid to Treasury by the bank over the last two years, the government said it took in a total of $57 billion.

"By selling all the remaining Citigroup shares today, we had an opportunity to lock in substantial profits for the taxpayer and avoid all future risk," Tim Massad, acting assistant secretary for financial stability, said in a statement. "With this transaction, we have advanced our goals of recovering TARP funds, protecting the taxpayer and getting the government out of the business of owning stakes in private companies," he said.

Citi and Bank of America Corp. were the two biggest bank recipients of government aid under the Troubled Asset Relief Program, or TARP. Each bank got $45 billion.

The government injected an initial $25 billion into Citi in late 2008 as the financial system crashed, and an additional $20 billion two months later as the bank's condition worsened amid massive losses on mortgages and other loans.

Citi repaid $20 billion of the bailout money in December 2009. The Treasury's remaining stake of preferred stock was converted to 7.7 billion Citi common shares, which it has been selling since spring. The government's cost basis for the shares was $3.25 each.

As the bank returned to profitability this year, its stock had risen 34 percent year to date through Monday, when it closed at $4.45 a share. The Treasury said its average selling price for its entire 7.7-billion-share stake came to $4.14 a share.

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