A day after competitor BofA raises capital to pay back the taxpayer-funded capital infusion, Citi is also making news but for the wrong reasons. In its attempt to get rid of government control of its business, plans of paying back the money and raising capital is hit by the news that the US Treasury is not selling the 7.7bn shares it currently holds, after injecting TARP funds along with other banks during the crisis. Bloomberg writes:
Executives at the New York-based bank are growing frustrated because they can’t sell stock to raise money for repayment until the Treasury signals when and how it will unload its 7.7 billion shares, said the people, declining to be identified because the matter is under discussion. Investors may be reluctant to buy shares because a Treasury sale could drive down the price.
“The ball is in the government’s court,” said Chris Kotowski, an analyst at Oppenheimer & Co. in New York, who has a “market perform” rating on the bank’s shares. “It’s not Citibank’s decision to sell them or not sell them.”
That’s bad news for Citi.
Read the entire article via Bloomberg.