CorporateUS Treasury stops plan to sell Citi shares: report
The US Treasury has suddenly shelved its plan to begin offloading stocks worth $5 billion in Citigroup after an unlively response from investors, says a media report.
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"The US government abruptly shelved plans to start trimming its 34 per cent stake in Citigroup, after investors demanded a price so low that the Treasury Department would have lost money on the deal," The Wall Street Journal reported.
The reversal came two days after the Treasury said it planned to sell as much as 5 billion stocks in the New York company, as part of Citigroup"s plan to pay back $20 billion in taxpayer aid the troubled bank received last year at the time of financial crisis.
According to the publication, the huge offering encountered a lukewarm reception on Wall Street, where investors were skeptical of the company"s earnings prospects and had already spent heavily on shares of rival banks this week.
As a result, Citigroup had to sell its stock at a discounted price of $3.15 a share. That"s 10 cents below what the Treasury paid for each of its 7.7 billion shares, the report noted.
"Faced with a potential paper loss of $770 million on Citibank investment," quoting the Treasury the report said, adding it had decided to hold off selling any of its shares until next year.