24 December,2009 10:14 AM IST | | IANS
Banking giant Citigroup, led by Indian American CEO Vikram Pandit, has repaid $20 billion it received in bailout funds as it works to free itself from government restrictions including the pay of its top 100 employees.
Citigroup which had received $45 billion under the US Troubled Asset Relief Programme last year over two separate bailouts, sold $17 billion in common shares and $3.5 billion in convertible notes to help raise capital to repay the government.
In a third bailout this year, the US agreed to swap the Citigroup preferred shares it owned into $25 billion of common stock and another $20 billion of more debt-like securities.
The government continues to hold $5.3 billion in trust preferred securities and 28 percent of Citi's common stock, which the Treasury said it intends to sell in 2010.
ALSO READ
Providing clean drinking water to every citizen Rajasthan govt's priority: CM Sharma
Atrocities case: IRS officer Sameer Wankhede moves HC seeking independent probe
Atrocities case: IRS officer Wankhede moves HC seeking independent probe against Nawab Malik
Cops take custody of Raipur man citing Salman Khan-Baba Siddique-SRK link
Maharashtra polls: Centenarians, elderly citizens cast votes at polling stations in Mumbai
When Citi announced its repayment plan, Pandit who has been working at an annual salary of $ 1 had said, "We owe the American taxpayers a debt of gratitude."
Meanwhile, Wells Fargo & Co also Wednesday said it had completed its $25 billion repayment. Bank of America Corp. (BAC) surprised investors by announcing plans to repay $45 billion in TARP aid earlier this month.
With the actions by Wells Fargo and Citi, America's four largest banks have returned their aid packages, as have several large regional banks. The largest banks that haven't yet repaid their TARP funds are PNC Financial Services Group Inc. (PNC) and SunTrust Banks Inc. (STI)
The rush to repay signals that banks once more have access to private capital. But it also reflects bankers' resistance to government influence, which restricted executive pay and, some said, prevented banks from operating freely, analysts said.
TARP was introduced in the autumn of 2008 when the financial crisis put the economy at risk of falling into a depression.
The US Treasury Department currently estimates that TARP programmes aimed at stabilising the banking system will earn a profit thanks to dividends, interest, early repayments, and the sale of warrants.
Total bank investments of $245 billion in FY2009 that were initially projected to cost $76 billion are now projected to bring a profit.
Taxpayers have already received over $16 billion in profits from all TARP programmes and that profit could be considerably higher as Treasury sells additional warrants in the weeks ahead, the Department said.
