The Treasury started selling off its 27 per cent stake in Citigroup yesterday, the latest step in the Obama administration’s effort to end unpopular bailout programmes.
The US government acquired the stake after it gave Citi $45bn (£30bn) in bailout money in 2008 and 2009. Citi has paid back $20bn in preferred shares, but another $25bn was converted to common stock last year.
The Treasury announcement disappointed investors who were hoping that the government had already started unloading its Citigroup stake, analysts said.
The Treasury said it gave Morgan Stanley, its sales agent, authority to sell up to 1.5bn common shares, a first batch of the 7.7bn shares the government holds. It said it expects to give Morgan Stanley the authority to sell more shares after the initial amount.
The Obama administration is winding down the Troubled Asset Relief Programme (Tarp) as quickly as it can. The $700bn programme is unpopular with American taxpayers who contributed to the rescue and then watched executives collect multimillion-dollar pay packages.