NEW YORK (
is officially halfway to breaking free of government shackles.
Late Wednesday, the company said it has completed the repurchase of $20 billion in trust preferred securities held by the U.S. Treasury through the company's participation in the Troubled Asset Relief Program. Citigroup also terminated its loss-sharing agreement with the government. The company was able to execute the repurchase with proceeds from last week's sale of $17 billion in common stock, and $3.5 billion worth of in tangible equity units.
As part of the deal to end the loss-sharing program, the government agreed to cancel $1.8 billion worth of trust preferred securities. Those securities were part of the $7.1 billion in trust preferred securities paid in relation to the loss-sharing program, so the government continues to hold the remaining balance of $5.3 billion of securities related to that consideration.
The Treasury also continues to hold a number of warrants to buy Citigroup common stock that were issued as part of the TARP investment, as well as 7.7 billion Citigroup common shares. The government plans to sell those equity positions sometime in the next year.
Following the repayment, Citigroup said its pro-forma Tier 1 capital ratio as of Sept. 30 would have been 11.0%, compared with a prior 12.8%, and that its pro-forma Tier 1 common ratio at the end of the third quarter would have been 9.0%, compared with 9.1%.
Last Wednesday, Citigroup embarked on the equity raise necessary to its effort to pay back the TARP funds. The pricing for the stock offering, however, was lower than expected, coming in at $3.15 per common share. That prompted the government, which had planned to sell a portion of its stake in the offering, to hold off, as it owns its shares at $3.25 each.
A contributing factor to the weak demand from institutional investors for Citigroup's stock was likely the proximity of its offering to similar stock sales this month by big bank brethren
Bank of America
, which raised $19 billion and $12 billion respectively, to repay their TARP funds.
announced the completion of its repayment of $25 billion in bailout funds earlier on Wednesday.
Citigroup shares finished the session down a nickel at $3.29. Volume of 355 million came in well below the issue's trailing average three-month daily volume of 513 million, although the stock was still the most active on the New York Stock Exchange.
That average daily volume figure has swelled of late, bolstered by monster trading sessions last week in the wake of Citigroup's equity raise. Nearly 8 billion shares changed hands in the three sessions spanning from Dec. 16-18. The Dec. 17 session alone saw volume in the stock reach roughly 3.8 billion.
According to the NYSE, a number of trading volume records were beat on Dec. 18, in large part because of the heavy interest in Citigroup. Regular-session trading volume on the Big Board totaled a record 3.16 billion on Dec. 18, with Citigroup's trading volume on the NYSE that day alone reaching a record 874 million.
--Written by Laurie Kulikowski in New York.