Treasury says it will sell Citigroup common stock this year

The Treasury Department announced plans today to sell its 7.7 billion shares of Citigroup Inc.'s common stock this year in a move that could raise tens of billions of dollars for the government.

Details about the transaction - including the timing and manner of the sale - have yet to be fully determined. The sale will not affect Treasury's additional holdings of Citigroup preferred securities and warrants.

Treasury announced in December 2009 that it would start liquidating its Citigroup common stock, but the shares soon fell below $3.25 - the rate that Treasury paid for them. The department put the sale on hiatus.

Citigroup's stock closed Monday at $4.18, giving the government's shares a market value of nearly $32.2 billion.

The federal government owns 27 percent of Citigroup, which was one of the two biggest beneficiaries of the bailout funds that went to the banking sector.

On Oct. 28, 2008, Treasury invested $25 billion in Citigroup through TARP's Capital Purchase Program. Less than a month later, it announced that Citigroup would get an additional $20 billion, plus more than $300 billion of loan guarantees, following the results of the institution's stress test.

Last September, Treasury converted the $25 billion in Citigroup preferred stock it got in the first TARP financing into common shares, at the rate of $3.25 a share.

Citigroup repaid the extra $20 billion in December.

Treasury continues to hold more than $5 billion in preferred securities that Citigroup issued in return for the loan guarantees, as well as warrants to buy common shares it got as part of the TARP investments.