Citi and US spilt on Tarp

City A.M. Reporter
Citigroup and the US government disagree over how much the bank should raise to repay taxpayers and talks may not finish for weeks or even months, people briefed on the matter said yesterday.<br /><br />The bank and the United States have to resolve questions including how the government would shed its roughly 7.7bn shares in the bank &ndash; worth $31bn (&pound;18.8bn) at current prices &ndash; and how the government would stop insuring a pool of troubled assets against loss, the sources said.<br /><br />After Bank of America sold $19.3bn of shares last week and announced a plan to repay government money borrowed through the Troubled Asset Relief Programme, investors are paying close attention to other banks that may soon leave the programme.<br /><br />Citigroup has much to gain from exiting Tarp. The US government has a good deal of say over how it pays its top executives, for example, which could hinder the bank&rsquo;s efforts to retain its best employees.<br /><br />But Citigroup may have more trouble paying back bailout funds than Bank of America did, because it has received more government support. The United States owns about a third of the bank&rsquo;s shares, after Citigroup gave a big chunk of common stock to investors in exchange for preferred shares.<br /><br />The government also guarantees a portfolio of Citigroup assets against excessive losses. That portfolio stood at around $182bn at the end of the third quarter.<br /><br />The government did not own Bank of America common shares and never closed on a deal to guarantee a portfolio of the bank&rsquo;s assets against high losses. That portfolio stood at around $182bn at the end of the third quarter.<br />