Citigroup, Inc (NYSE: C) Stock Sale Slowed by U.S. Treasury

Posted by on Jul 5th, 2010

The rate at which the U.S. treasury sold shares of Citigroup, Inc (NYSE: C) slowed during the month of June as Citigroup, Inc (NYSE: C) shares declined by 5.1% during a general stock market slump.

Between May 27th and June 30th, the government sold 1.1 billion shares according to a statement from the U.S. Treasury on July 1st. The sales, which are being managed by Morgan Stanley (NYSE: MS), have generated $4.3 billion and reduce the government’s holdings in Citigroup, Inc (NYSE: C) to 5.1 billion shares or about 18% of the total outstanding shares.

During the period, there were a total of 24 trading days, averaging about 45 million shares sold per day. During the initial sale period between April 26th and May 26th, the U.S. Treasury sold 65 milion shares during a 23 day period.

“At the current pace they’re going to miss” a targeted completion date of Dec. 14, said Linus Wilson, a finance professor at the University of Louisiana at Lafayette to Businessweek. “If they miss that arbitrary deadline, a lot of investors who were banking on the end of government ownership of Citigroup are going to be disappointed, because they would have to wait a little longer.”

The government received  its Citigroup, Inc (NYSE: C) stock last year after agreeing to convert $25 billion worth of bailout funds into common stock at $3.25 beach for a total of 7.7 billion shares or about a 27% stake. Citigroup, Inc (NYSE: C) received a $45 billion rescue package in 2008 and repaid $20 billion of that total in December.

The U.S. Treasury has netted a $2 billion profit with the current sales and has an additional $2.5 billion in paper profit sitting in the remaining shares. The U.S. Treasury and the FDIC have also retained $5.3 billion worth of Citigroup, Inc (NYSE: C)’s junior debt, which the two organizations got to keep after the bank agreed to forgo a federal asset-guarantee program.

“We are pleased that Treasury has profitably sold a third of its common shares in Citi, adding to the substantial return for taxpayers realized last year,” the bank said in a statement today.