Washington, Dec 14 (Inditop.com) Ahead of a meeting with President Barack Obama, Citigroup’s Indian American CEO Vikram Pandit Monday announced that the banking giant has struck a deal with the government to return $20 billion in bailout money to taxpayers.
“We are pleased to be able to repay the US government’s trust preferred securities and to terminate the loss-sharing agreement,” Pandit said in a statement.
“As I have stated many times over the past year, we planned to exit TARP only when we were convinced that it was prudent to do so.”
The New York City-based bank said it would raise the money through a combination of stock and debt, the bulk of which would come from a $17 billion common stock offering.
The announcement came as Obama prepared to meet the chiefs of the nation’s biggest banks at the White House and press them to help speed the economic recovery by providing more loans to small businesses and homeowners.
The president, who has faced criticism from Democrats and Republicans alike for being too close to Wall Street, called Citigroup, Goldman Sachs and 10 other big banks to the gathering as anger over last year’s bank bailouts continued to percolate.
Obama will address the size of salaries and bonuses, an official said, as he seeks to impress upon bankers that they have a “special responsibility” to consumers.
Citigroup became one of the biggest recipients of bailout money last year after the government injected $45 billion into the company to help stabilise the embattled lender.
Concerned about the company’s underlying health and ability to endure future loan losses, the government converted $25 billion of its preferred-stock stake in the company into common stock over the summer. That effectively gave US taxpayers a 34 percent stake in one of the world’s largest financial institutions.
Citigroup said Monday that the government would get rid of those shares, starting with the sale of $5 billion worth of stock. The remaining shares would be sold “in an orderly fashion” over the next six to 12 months.
The company also said it was terminating the loss-sharing agreement it had struck with regulators in November in which the government agreed to backstop some losses against more than $300 billion in troubled assets.
On Friday, White House “pay czar” Kenneth Feinberg capped base salaries for 75 Citigroup employees at $500,000 for the remaining three weeks of 2009. Those changes were expected to serve as the model for their pay next year as well.
Fearing such changes, large financial institutions have been scrambling to return bailout money to the government.
Last week, rival Bank of America got out from under the government’s thumb by repaying the full $45 billion in bailout money it received.
