Belfast Telegraph

Wednesday 17 September 2014

Citigroup 'close to paying back US government after bailout'

Citigroup is close to a deal with the US government to begin repaying some of the billions in bail-out aid it has received, according to a report.

CITIGROUP 'NEARING DEAL TO PAY BACK GOVERNMENT'

Citing unnamed people familiar with the matter, The Wall Street Journal reported on its website that Citigroup executives were hoping to release details as early as today.

Under the expected deal, Citigroup would sell more than 10 billion dollars (£6bn) in common stock to help it repay some of the 20 billion dollars (£12.3bn) that the government injected into the bank last year, the paper said.

The money also would allow the New York-based bank to leave a programme giving it government protection from losses on more than £184 billion worth of assets.

In return, Citigroup executives are hoping that the US Treasury Department will sell at least a portion of the government's 34% stake in the company, which it received for its total £28 billion investment, according to the paper.

Citigroup spokesman Jon Diat declined to comment.

Pressure on Citigroup to repay the loans is building after Bank of America earlier this month repaid the £28 billion it had received, adding to the £43.5 billion already repaid by about 50 other financial companies.

Banking analysts have said Citigroup and Wells Fargo will face a competitive disadvantage as the last two large US banks still holding funds from the treasury's Troubled Asset Relief Programme.

Both are subject to restrictions on employee compensation until they repay the government and that has raised worries that top performers will defect to rival firms.

But the government may be reluctant to let them repay until they are confident that no further assistance will be needed.

Many banks still face big losses on loans as people fall behind on bills - losses that could further erode their capital and put them in danger.

Even if a deal is completed, Citigroup is unlikely to be completely free of government control in the near future since the Treasury Department will probably not sell all of its holdings in Citigroup at once.

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