NEW YORK (AP) — The Treasury Department said Monday it will begin selling the stake it owns in Citigroup Inc., which could result in a profit of more than $8 billion.
The government received 7.7 billion shares of Citigroup in exchange for $25 billion it gave the bank during the 2008 credit crisis. It said it will sell the shares over the course of this year, depending on market conditions.
Like any investor, the government will likely hold on to its shares if prices fall steeply. However, Citi shares have steadily been rising with the broader market in recent months, which means the Treasury Department stands to pocket a hefty profit.
Citi shares rose 8 cents to $4.39 in early trading Monday. The government would make about $8.8 billion in profit on its stake in Citigroup if it sells the stock for $4.39 a share.
The Treasury Department received its stock for a price of $3.25 a share last year.
Citi was one of the hardest hit banks during the credit crisis and recession. It received a total of $45 billion in bailout money. Citi repaid the other $20 billion it owed the Treasury in December.
When Citigroup agreed to repay the $20 billion in loans it still owed the Treasury Department, the pair also agreed the Treasury would sell the common stock it owned in the New York bank throughout 2010.
The Treasury owns about 27 percent of Citigroup's outstanding stock, based on the number of shares that were outstanding on Jan. 31.
Even after it sells its stake in Citigroup, the Treasury Department will still hold warrants to purchase future shares in the bank.
The Treasury said Morgan Stanley will handle the sale of the shares.
Copyright 2010 The Associated Press.
