Citi Getting Out From Under TARP

Citigroup plans to repay $20 billion that it borrowed from U.S. taxpayers through the Troubled Asset Relief Program. That’s good news for Citi execs, who will be able to pay themselves whatever they want once they’re free from TARP restrictions. And it may be good for taxpayers, as long as Citi doesn’t take any of those ultra-cheap Federal loans like BofA did. Citi shareholders? Hey, somebody’s gotta pay for this.

As spelled out by Bloomberg, to pay back the government, Citibank will:

[S]ell $17 billion of common stock, with a so- called over-allotment option of $2.55 billion, and $3.5 billion of “tangible equity units.” The U.S. Treasury will sell as much as $5 billion of common stock it holds, with plans to unload the rest of its stake during the next six to 12 months. An additional $1.7 billion of common stock equivalent will be issued next month to employees in lieu of cash they would have otherwise received as pay. The TARP payments will result in a roughly $5.1 billion loss.

Citigroup fell to $3.86 in New York trading at 8:03 a.m., down from its $3.95 close on Dec. 11. The stock has tumbled 41 percent this year, valuing the lender at about $90 billion.

Guess this means they can keep their name on the stadium.

Citigroup to Repay $20 Billion of Government Bailout [Bloomberg.com]
Previously: Why Bank of America’s TARP Payback Is Bad News