Citi to Repay $20 Billion in TARP Funds

Today, Citigroup announced that it will repay $20 billion in TARP funds. Since last fall, the government has provided $45 billion in capital for Citi, investing in the company through the Capital Purchase Program and the Targeted Investment Program.

The $45 billion in direct aid understates the government’s entire efforts to help shore up Citi. Like Bank of America, the government has also created a multi-agency guarantee of Citigroup assets, with the Treasury, FDIC, and Federal Reserve insuring $301 billion in Citigroup assets. Earlier this year, the government converted $25 billion in equity shares to a 34 percent ownership stake in the company.

By approving the repayment, according to an AP article, the government is essentially saying that Citi is on sure enough footing to stand on its own. Citi will sell $20.5 billion in stock and debt to raise money to repay the TARP funds. The government also plans to sell its ownership stake over the next year. The article reports that due to increases in Citi’s stock value, the Treasury is on track to earn roughly $13 billion in profit from its investments in Citi.

CRFB will continue to monitor and track TARP investments and repayments at Stimulus.org.