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Citi steps out on its own

Citi steps out on its own

(16 December 2009 – USA) US banking giant Citigroup has announced plans to repay US$20 billion (A$22 billion) in state aid as it endeavours to stand on its own two feet. Citi has said that it will sell US$20.5 billion in new securities under the plan enabling the group to buy back preferred shares held by the US Treasury under the Troubled Asset Relief Program (TARP).

The bank, kept afloat by a number of state rescues during the global financial crisis, also has plans to sell US$5 billion of common stock.

Citi said in a statement that it will sell the remainder of its shares in an orderly fashion over the next 12 months.

The agreement also calls for an end to additional state guarantees to Citigroup in a so-called loss-sharing agreement.

The deal would wind down the rescue of Citigroup, the most extensive rescue for the US banks hit by the financial crisis last year.

The Government injected a total of $US45 billion in the firm, once the world's biggest banking group. It converted a portion of that to common stock earlier this year in exchange for a stake of around 34 percent in Citi.

Vikram Pandit, chief executive officer, Citi, said on behalf of the entire Citi Board of directors, that the TARP program was designed to provide assistance until banks were in a position to repay it prudently. Citi are pleased to be able to repay the U.S. government's trust preferred securities and to terminate the loss-sharing agreement.

The bank owes the American taxpayers a debt of gratitude and recognises Citi’s obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need, Mr Pandit added.
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