Monday, Dec 14th, 2009
Citigroup said Monday that it had reached an agreement to wean itself from the government bailout by the end of 2010, beginning with the repayment of $20 billion in federal aid.
The deal is the latest sign that both banks and the government are eager to end an extraordinary period of federal support for the financial industry. It would leave Wells Fargo alone among major banks in still holding federal aid.
Citigroup’s departure will come in two phases. First, the company will raise money from investors to repay $20 billion in federal aid as soon as possible. Then the government will sell the shares it holds in Citigroup, which it bought for $25 billion, in chunks over the next year.
The terms of the deal, which require Citigroup to replace its federal aid dollar for dollar with money from private investors, are much tougher than the terms imposed by the government on other banks that have repaid bailout funds, including rivals Bank of America and J.P. Morgan Chase. That is a reflection of regulators’ continued concern about Citigroup’s health.
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This article was posted: Monday, December 14, 2009 at 10:38 am