US Govt looks to sell Citigroup stake

The US Treasury Department and Citigroup have begun discussing how to sell the 34 per cent stake that the Government acquired in the rescue of the bank, sources say.

The Treasury, which owns about 7.69 billion common shares after a recent stock conversion designed to shore up the bank's capital, may start unloading the stake next month, one source says.

It aims to sell the holdings over the next six to eight months, the source says.

One plan the Treasury is considering would see the shares sold to public investors over six to eight months, or the Government may sell a small amount of stock daily or weekly, say the sources, who declined to be identified because the talks are private.

Under a third option, the shares would be sold at once in a managed offering.

The Obama Administration has begun to wind down the Government's US$700 billion ($1 trillion) financial rescue programme.

The Treasury purchased the stock at US$3.25 a share, giving US taxpayers a paper profit of about US$9.77 billion based on yesterday's closing stock price of US$4.52.

Citigroup's bailout last year was valued at US$52 billion.

The Government would retain a US$27 billion investment. That stake is denominated in trust-preferred shares - a class of securities that ranks senior to common stock and junior to most debt.

Treasury spokesman Andrew Williams and Susan Thomson, a spokeswoman for New York-based Citigroup, declined to comment.

- BLOOMBERG