Feds Look to Unload Citi Stake, Collect $8B

Dumping 27% stake would be 2nd-largest offering ever
By Polly Davis Doig,  Newser Staff
Posted Mar 27, 2010 9:04 AM CDT
Feds Look to Unload Citi Stake, Collect $8B
Specialist Patrick Murphy, left, and trader Christopher Fuchs, with Citigroup Global Markets, confer on the floor of the New York Stock Exchange.   (AP Photo/Richard Drew)

At the time, throwing scads of cash at crumbling banks looked risky. But now it's financial genius as the Obama administration looks to unload its stake in Citigroup—and collect a tidy $8 billion profit in doing so. The transaction, which the Washington Post reports will be the second-largest stock offering ever, will cut nearly all TARP ties between Citi and the government, which holds a 27% stake.

Citi's stock has gone from around a buck a share a year ago to $4.31 yesterday—which means the feds' $25 billion stake, negotiated at $3.25 a share, has grown to $33 billion. "It's unprecedented to do [a stock sale] of this size right after the financial industry has been so battered," says an anonymous industry official. "It's just a very bullish sign." (More Citigroup stories.)

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