DECEMBER 6, 2010, 6:27 P.M. ET.

U.S. to Unload Rest of Citi Stake, Likely at a Profit

By MICHAEL R. CRITTENDEN

WASHINGTON—The Treasury Department said Monday that it would begin selling off its remaining stake in Citigroup Inc., with the government optimistic it will make a profit on the $45 billion in aid provided to the bank at the height of the financial crisis.

The planned sale of 2.4 billion shares of Citi common stock wouldn't end the bank's ties to the government. The Treasury would continue to hold warrants for the bank's common stock, and is eligible to receive an additional $800 million tied to government guarantees on Citi's debt.

Still, the Treasury's ability to successfully dispose of the 7.7 billion shares of Citi it received during the financial crisis would mark a symbolic step as both the government and private sector seek to step back from the massive government intervention necessitated by the financial crisis.

Citi was regarded as a poster child for the unprecedented steps the government was forced to take at the height of the market tumult, receiving $45 billion in taxpayer aid as well as additional guarantees. Despite skepticism from the public and many lawmakers, Treasury officials now expect to make a profit on that investment.

Department officials said that Treasury had received total proceeds of $42.8 billion through the end of October from Citi's interest, dividend and other repayments to the government. That figure includes the sale of 4.4 billion shares of Citi common stock with proceeds for $17.6 billion.

Since October, the Treasury has sold an additional 900 million shares of Citi common stock. With Citi shares trading above $4 for the majority of that time frame, people familiar with the matter said the Treasury is now in the black on the $45 billion investment in the bank.

Citi said in a statement that it was pleased by the move, adding that the bank is "very appreciative" of the taxpayer aid it received during the financial crisis.

The Treasury had hoped to sell all of its shares of Citi stock year's end, though that timeline could slip into next year as the government has shown a preference for meting out the shares it sells into the market. A Treasury spokesman declined to say what timeline the department had for completing the sale.

Write to Michael R. Crittenden at michael.crittenden@dowjones.com

http://online.wsj.com/article/SB1000142 ... Collection