Citi is to pay back $20 billion owed to government



image As Citigroup’s Chief Executive Vikram Pandit announced Wednesday, the corporation intends to pay back $20 billion it owes the government when the bank sees more concrete signs of recovery, as the bank has suffice of capital to use to pay back the $20 billion.

Previously, Citigroup was in negotiations with the regulators about the way of repaying the funds and was considering issuing $5 billion to buy back trust preferred securities, represented by stocks and bonds, held by the government.

The government has imposed more than $45 billion into the bank since last October to stabilize a bank hobbled by bad securities and consumer loans.

Originally, government funds acquired preferred securities. However, earlier this month about $25 billion of those securities were converted into common stock, with the rest being swapped for trust preferred securities.

The government’s 7.69 billion common stocks are now quoted about $33 billion, based on Citi’s Wednesday afternoon share price of $4.23. And the government can sell its shares at any time.

The Citigroup’s shares gained 2.7% during afternoon trading.

ECJ




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