Having worked out whatever differences might have existed between it and the federal government, Citigroup announced this morning that it has reached an agreement to repay its $20 billion TARP bailout."The TARP program was designed to provide assistance until banks were in a position to repay it prudently. We are pleased to be able to repay the U.S. government's trust preferred securities and to terminate the loss-sharing agreement," Citigroup CEO Vikram Pandit said in a Monday morning press release. "We owe the American taxpayers a debt of gratitude and recognize our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need."
From the Wall Street Journal: --- Unlike any other banks that have repaid the aid so far, Citi has to replace the $20 billion of TARP funds that remained on its balance sheet entirely with fresh capital. The government and banking regulators demonstrated that, at least for now, they decide the conditions for TARP exit on a case-by-case basis, and are willing to set tough conditions.
Citi, however, will feel liberated. It can demonstrate publicly what is has been building on behind the scenes: A large global bank whose growth and expansion will be largely overseas rather than in the United States. ---
Under the agreement, Citigroup will issue $17 billion of common stock and $3.5 billion of tangible equity units. In addition, the U.S. Treasury will sell up to $5 billion of the common stock it holds in a concurrent secondary offering, according to the press release.