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Citigroup: US government delaying sale of stake
2009-12-14
WASHINGTON (AFP) - The US government is delaying the sale of its stake in banking giant Citigroup as the company faced weak demand for a share offering to finance the deal, the firm has said. Citigroup said Wednesday the US government was delaying the sale of its stake, amid fears that a weak share price could spell massive loses for the Treasury. Citi said the offering saw prices of 3.15 dollars per share, for a total of 17 billion dollars, well below the average price paid by the US government. The government is said to have paid 3.25 per share for its stake in the firm, part of a multi-billion-dollar bailout. That prompted the Treasury to extend a lock on the sale of its stake in the firm for 90 days. "The US Treasury announced it would extend its lock-up period on the sale of its 7.7 billion share common equity stake to 90 days from 45 days after the completion of this offering," Citigroup said in a statement. The US government currently owns one third of the firm. Citigroup's share offering had earlier been hailed as a sign the banking sector was closer to standing on its own. Facing a global economic meltdown not seen since the Great Depression of the 1930s, the US Treasury at the end of 2008 stepped in with the series of bailouts to stabilize the financial system and keep credit flowing. Citi's announcement, closely followed by a similar one from Wells Fargo, meant that all the major US banks that received capital injections had repaid or are in the process of repaying the government.
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