Citi Completes $20bn TARP Repayment, Terminates Loss-Sharing Agreement

Citi Wednesday announced it has completed the previously announced repayment of $20 billion invested in the company by the U.S. government through the Troubled Asset Relief Program (TARP) and terminated the loss-sharing agreement with the government.

The repayment of the TARP trust preferred securities and termination of the loss-sharing agreement follow the successful completion of a securities offering in which Citi raised $20.5 billion, including $17 billion in common shares and $3.5 billion in tangible equity units.

To repay the TARP investment, Citi repurchased $20 billion of TARP trust preferred securities. As part of the agreement to end the loss-sharing program, the government has cancelled $1.8 billion of trust preferred securities that were part of the $7.1 billion paid in consideration for the program. The government continues to hold $5.3 billion in trust preferred securities.

The U.S. Treasury continues to hold warrants to buy Citi common stock issued as part of the TARP investment and 7.7 billion common shares, which it said it plans to sell in 2010.

After giving effect to the issuance of the $17 billion in common stock, $3.5 billion of tangible equity units and $1.7 billion of stock compensation previously announced by Citi, as well as the repayment of $20 billion of the TARP trust preferred securities and the termination of the loss-sharing agreement, Citi's pro forma Tier 1 capital ratio at the end of the third quarter of 2009 would have been 11.0%, compared with 12.8%. The company's pro forma Tier 1 common ratio at the end of the third quarter would have been 9.0%, compared with 9.1%.

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