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US 'halts' planned Citigroup sale Citi shares drop as sale 'halted'
(about 4 hours later)
The US Treasury has reportedly backed out of plans to sell part of its 34% stake in troubled US bank Citigroup. Shares in Citigroup fell 9% as the US Treasury has backed out of plans to sell part of its stake in the troubled US bank.
Citigroup said on Wednesday that it would sell shares at a steep discount to raise the cash it needs to repay $20bn of the bail-out it received.Citigroup said on Wednesday that it would sell shares at a steep discount to raise the cash it needs to repay $20bn of the bail-out it received.
The Treasury had been planning to sell $5bn worth of shares, but reports say it has reconsidered after the price was set below what it paid. The Treasury reconsidered selling $5bn of shares after the price was set below what it paid.
That would mean the US would have taken a politically unpalatable loss.That would mean the US would have taken a politically unpalatable loss.
Citigroup is the last Wall Street bank to leave the US bail-out programme instituted during the financial crisis. Citigroup - which is 34% owned by the government - is the last Wall Street bank to leave the US bail-out programme instituted during the financial crisis.
The US Treasury was planning to sell a $5bn stake in the bank during the share sale.The US Treasury was planning to sell a $5bn stake in the bank during the share sale.
But Citigroup's $17bn of new shares met with a tepid reception when it started offering them to institutional investors on Tuesday.But Citigroup's $17bn of new shares met with a tepid reception when it started offering them to institutional investors on Tuesday.
"The US Treasury decided not to sell any of its shares in connection with Citi's sale of common stock," the bank said after it priced its share sale.
The government now plans to sell its entire stake, about 7.7 billion shares, over the next six to 12 months, according to US media reports.The government now plans to sell its entire stake, about 7.7 billion shares, over the next six to 12 months, according to US media reports.
The bank announced on Wednesday it would sell stock at $3.15 per share, below the $3.25 price that the government paid for its stake.The bank announced on Wednesday it would sell stock at $3.15 per share, below the $3.25 price that the government paid for its stake.
Citigroup shares fell 9% to $3.15 in opening trade.
Shares in the US bank have fallen every day this week.