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Citigroup to repay $20bn bail-out | Citigroup to repay $20bn bail-out |
(about 2 hours later) | |
Citigroup has said it will repay $20bn of US bail-out funding, marking the bank's exit from the US government's Troubled Asset Relief Program (Tarp). | |
Citigroup is the last of the big US banks to leave the support mechanism. It will issue $17bn in new shares to help finance the move. | Citigroup is the last of the big US banks to leave the support mechanism. It will issue $17bn in new shares to help finance the move. |
Theoretically, it means it can now avoid pay restrictions on its top 100 employees. | Theoretically, it means it can now avoid pay restrictions on its top 100 employees. |
The bank said it owed American taxpayers "a debt of gratitude". | The bank said it owed American taxpayers "a debt of gratitude". |
Citigroup received $45bn in government support but only has to pay back $20bn as the US government converted the rest into a stake in the company. It owns 34% of the bank. | Citigroup received $45bn in government support but only has to pay back $20bn as the US government converted the rest into a stake in the company. It owns 34% of the bank. |
The government says it plans to sell these shares within the next year. The US Treasury estimates that taxpayers could ultimately see a profit of $13bn-$14bn from the sale. | |
Payback time | Payback time |
Nearly 700 banks were assisted by Tarp, and most were quick to repay the bail-out money because it came with restrictions such as caps on executive pay and dividends. | |
[Citigroup] are still in the government's embrace. It's just not a bear hug now Anton Schutz, president of Mendon Capital Advisors | |
Last week Bank of America paid back its $45bn Tarp funding. Now the only national bank remaining with the programme is Wells Fargo. | |
The US Treasury said it was pleased Citigroup was moving forward with plans to repay the money. | The US Treasury said it was pleased Citigroup was moving forward with plans to repay the money. |
"While much work lies ahead to improve lending and spur job creation, today's announcement by Citigroup takes us another step in the right direction." | "While much work lies ahead to improve lending and spur job creation, today's announcement by Citigroup takes us another step in the right direction." |
Analysts noted that, like other banks repaying the government, Citigroup is still subject to US regulation and pressure. | |
"They're still in the government's embrace. It's just not a bear hug now," said Anton Schutz, president of Mendon Capital Advisors. | |
'Fat cat' meeting | |
Later on Monday, President Obama will meet top banking executives, including those from Citigroup. | Later on Monday, President Obama will meet top banking executives, including those from Citigroup. |
He will ask them to support his efforts to tighten regulation on the financial industry and to boost lending to small businesses. | He will ask them to support his efforts to tighten regulation on the financial industry and to boost lending to small businesses. |
The meeting could well prove tense after the president referred to bankers as "fat cats" in a TV interview on Sunday. | The meeting could well prove tense after the president referred to bankers as "fat cats" in a TV interview on Sunday. |
In its statement, though, Citigroup struck a conciliatory tone, saying it recognised "our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need". | In its statement, though, Citigroup struck a conciliatory tone, saying it recognised "our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need". |