The Treasury Department announced they've sold the final 465.1 million Citigroup (NYSE:C) warrants to acquire common shares in the giant bank. They recouped $312.2 million from the sale.
Tim Massad, Treasury's acting assistant secretary for financial stability, said in a statement, "As we exit our investments in private companies and recover taxpayer dollars, it's clear that the cost of the TARP program will be a fraction of what many had once feared during the depths of the crisis."
Of course the cost was much higher than that, as the government should never have been involved in the situation in the first place, and should have allowed the market sort things out, with those companies run well surviving and taking over the assets of failing banks, making the financial sector much stronger.
Now the government has got a taste of more power, and are poised to interfere in the private sector again, whenever they perceive the need to.
Citigroup and other banks accepting TARP funds were forced by the Treasury to offer warrant in order to generate maximum returns on taxpayers' money. That was also to alleviate the anger of the public at the government going beyond its mandate it in the first place.
Citigroup was trading at $4.84, up $0.01, or 0.31 percent, as of 11:17 AM EST.
Showing posts with label US Treasury. Show all posts
Showing posts with label US Treasury. Show all posts
Wednesday, January 26, 2011
Monday, January 24, 2011
Treasury Auctioning Citigroup (NYSE:C) TARP Warrants Tuesday
Warrants received by the Treasury from Citigroup (NYSE:C) during the financial crisis will be auctioned on Tuesday, with Deutsche Bank AG (NYSE:DB) being the auction agent in the sale.
The Treasury said in its statement, “The proceeds of this sale will provide an additional return to the American taxpayer from Treasury’s investment in the company beyond the dividend payments it received on the related preferred stock and the profit received from the sale of shares of common stock and trust preferred securities of the company.”
The statement said 0n Tuesday the Treasury will sell 255 million “A” warrants with a minimum bid price of 60 cents and 210 million “B” warrants with a minimum bid of 15 cents.
In order to received taxpayer dollars, the Treasury required warrants as a form of compensation. Holders of the warrants had the option of acquiring shares at a set price for a period of 10 years.
Lenders also have an option to buy the warrants back if they choose.
Citigroup was trading at $4.8750, down $0.015, or 0.31 percent, as of 12:36 PM EST.
The Treasury said in its statement, “The proceeds of this sale will provide an additional return to the American taxpayer from Treasury’s investment in the company beyond the dividend payments it received on the related preferred stock and the profit received from the sale of shares of common stock and trust preferred securities of the company.”
The statement said 0n Tuesday the Treasury will sell 255 million “A” warrants with a minimum bid price of 60 cents and 210 million “B” warrants with a minimum bid of 15 cents.
In order to received taxpayer dollars, the Treasury required warrants as a form of compensation. Holders of the warrants had the option of acquiring shares at a set price for a period of 10 years.
Lenders also have an option to buy the warrants back if they choose.
Citigroup was trading at $4.8750, down $0.015, or 0.31 percent, as of 12:36 PM EST.
Friday, January 21, 2011
Fifth Third (Nasdaq:FITB) Heading in Right Direction with Paying Back TARP, Still Warrants to Deal with
In a combination of debt and stock issuance, Fifth Third Bancorp (Nasdaq:FITB) announced they're going to raise the needed capital to pay back what they owe TARP.
The bank will raise the capital in order to buy back the $3.4 billion in preferred shares owned by the Treasury Department.
Half of that will be raised by selling $1.7 billion in common shares.
Even with that step, the Treasury still holds a big piece of the bank, as they hold warrants which allows them to acquire over 43.6 million common shares at the price of $11.72 each. With Fifth Third trading at over $14 a share at this time, the Treasury could make a tidy some as it is.
Fifth Third will eventually attempt to acquire the warrants directly from the Treasury or via an auction process.
While positive developments, the bank does have a long way to go before returning to sound financial health. One obvious area is the credit issues still weighing on the bank.
Fifth Third closed Thursday at $14.22, dropping $0.39, or 2.67 percent.
The bank will raise the capital in order to buy back the $3.4 billion in preferred shares owned by the Treasury Department.
Half of that will be raised by selling $1.7 billion in common shares.
Even with that step, the Treasury still holds a big piece of the bank, as they hold warrants which allows them to acquire over 43.6 million common shares at the price of $11.72 each. With Fifth Third trading at over $14 a share at this time, the Treasury could make a tidy some as it is.
Fifth Third will eventually attempt to acquire the warrants directly from the Treasury or via an auction process.
While positive developments, the bank does have a long way to go before returning to sound financial health. One obvious area is the credit issues still weighing on the bank.
Fifth Third closed Thursday at $14.22, dropping $0.39, or 2.67 percent.
Friday, January 14, 2011
Citigroup (NYSE:C) Finally to Get Government Off its Neck Completely
The U.S. Treasury announced Friday it will be selling its last stake in Citigroup (NYSE:C) via the warrants they still own in the giant financial institution.
Treasury said, "Apart from the warrants, Treasury has fully sold all other securities issued to it by Citigroup Inc., and each of the other financial institutions has fully repurchased Treasury´s preferred stock investment. The warrant sales anticipated during the current quarter, if consummated in full, would represent Treasury´s disposition of its remaining holdings in these financial institutions. The proceeds of these sales will provide an additional return to the American taxpayer from Treasury´s investments in these financial institutions beyond the dividend payments it received on the related preferred stock."
Those holding a warrant are given the right but not the requirement, to acquire or sell a security at a fixed price on or before a fixed date.
Treasury will sell the warrants via an auction, and it won't be known until then what they will get for the securities.
Citigroup was trading at $5.12, up $0.09, or 1.69 percent, as of 11:25 AM EST.
Treasury said, "Apart from the warrants, Treasury has fully sold all other securities issued to it by Citigroup Inc., and each of the other financial institutions has fully repurchased Treasury´s preferred stock investment. The warrant sales anticipated during the current quarter, if consummated in full, would represent Treasury´s disposition of its remaining holdings in these financial institutions. The proceeds of these sales will provide an additional return to the American taxpayer from Treasury´s investments in these financial institutions beyond the dividend payments it received on the related preferred stock."
Those holding a warrant are given the right but not the requirement, to acquire or sell a security at a fixed price on or before a fixed date.
Treasury will sell the warrants via an auction, and it won't be known until then what they will get for the securities.
Citigroup was trading at $5.12, up $0.09, or 1.69 percent, as of 11:25 AM EST.
Thursday, January 13, 2011
AIG (NYSE:AIG) Paying Off Government Friday at Cost of Huge Dilution
Assuming they are able to successfully implement their plan, AIG (NYSE:AIG) says they're going to pay off the U.S. government Friday, hopefully ending the taxpayer bailout of the company, which at its height cost over $180 billion.
The practicals of the transaction are the U.S. Treasury Department will exchange $49.1 billion of preferred shares they own for 1.655 billion new shares of AIG common stock on Friday.
The consequences will be an enormous dilution of the stock for those currently holding shares of AIG.
To battle the obvious exodus of shareholders, AIG has been given permission to issue close to 75 million warrants where private shareholders will be able to acquire one share of common stock of AIG for $45 each.
Warrants will start to trade under the ticker symbol “AIG WS” on the New York Stock Exchange today.
The distribution of warrants will occur on January 19 to shareholders of record as of January 13. Shares of AIG will resume trading with the right to warrants on January 20.
AIG Chief Executive Robert Benmosche said in a statement, “With today’s (Wednesday) announcement, we anticipate that we will be able to deliver on our promise to the American people to repay the extraordinary assistance they provided to AIG during the financial crisis of 2008.”
If the deal does close, the Treasury will own somewhere around 92 percent of AIG. Similar to the bailed out banks, the government will sale its stake in AIG over a period of time, based on market conditions and other factors.
AIG closed Wednesday at $58.40, losing $0.64, or 1.08 percent.
The practicals of the transaction are the U.S. Treasury Department will exchange $49.1 billion of preferred shares they own for 1.655 billion new shares of AIG common stock on Friday.
The consequences will be an enormous dilution of the stock for those currently holding shares of AIG.
To battle the obvious exodus of shareholders, AIG has been given permission to issue close to 75 million warrants where private shareholders will be able to acquire one share of common stock of AIG for $45 each.
Warrants will start to trade under the ticker symbol “AIG WS” on the New York Stock Exchange today.
The distribution of warrants will occur on January 19 to shareholders of record as of January 13. Shares of AIG will resume trading with the right to warrants on January 20.
AIG Chief Executive Robert Benmosche said in a statement, “With today’s (Wednesday) announcement, we anticipate that we will be able to deliver on our promise to the American people to repay the extraordinary assistance they provided to AIG during the financial crisis of 2008.”
If the deal does close, the Treasury will own somewhere around 92 percent of AIG. Similar to the bailed out banks, the government will sale its stake in AIG over a period of time, based on market conditions and other factors.
AIG closed Wednesday at $58.40, losing $0.64, or 1.08 percent.
Wednesday, December 8, 2010
Citigroup (NYSE:C) Still Deutsche's (NYSE:DB) Top Pick in Sector
Among the large cap banking sector, Citigroup (NYSE:C) is still the top pick of Deutsche Bank (NYSE:DB), and even more so on the heals of the divestation of shares in the company by the Treasury.
Deutsche Bank said it sees it "as a positive for Citi shares, as the US gov't ownership has been at least somewhat of an overhang/concern for many investors and analysts this year," referring to worries over interference in company operations.
That, along with "continued reductions in Citi Holdings (assets down $140b or 26% vs. a year ago ex-FAS 166/167 impact in 1Q10), further improvement in credit quality, and growing tangible book," said Deutsche.
They maintain their "Buy" rating on Citi, which closed Tuesday at $4.62, up $0.17, or 3.82 percent. Deutsche has a price target of $5.50 on them.
Deutsche Bank said it sees it "as a positive for Citi shares, as the US gov't ownership has been at least somewhat of an overhang/concern for many investors and analysts this year," referring to worries over interference in company operations.
That, along with "continued reductions in Citi Holdings (assets down $140b or 26% vs. a year ago ex-FAS 166/167 impact in 1Q10), further improvement in credit quality, and growing tangible book," said Deutsche.
They maintain their "Buy" rating on Citi, which closed Tuesday at $4.62, up $0.17, or 3.82 percent. Deutsche has a price target of $5.50 on them.
Tuesday, December 7, 2010
Investors Pour into Citigroup (NYSE:C) After Escaping Clutches of Treasury
Citigroup (NYSE:C) has attracted a hoard of investors and interest today, after the Treasury divested of its final holdings in the company, removing an obstacle everyone had been waiting for.
Volume of shares traded are already over 1.8 billion, and will assuredly move past the 2 billion mark before the day is over.
Most concerns surrounding Citigroup as it relates to the Treasury holdings was their influencing of company decisions, which a government entity doing would be a disaster for any company, as they're clueless as to run a private enterprise.
Citigroup was trading at $4.59, up $0.14, or 3.26 percent, as of 12:28 PM EST.
Volume of shares traded are already over 1.8 billion, and will assuredly move past the 2 billion mark before the day is over.
Most concerns surrounding Citigroup as it relates to the Treasury holdings was their influencing of company decisions, which a government entity doing would be a disaster for any company, as they're clueless as to run a private enterprise.
Citigroup was trading at $4.59, up $0.14, or 3.26 percent, as of 12:28 PM EST.
Thursday, November 18, 2010
Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM), Morgan Stanley (NYSE:MS), Have 30 Days to Exercise GM (NYSE:GM) Option
The long anticipated, but overhyped IPO of General Motors (NYSE:GM) has finally come, and interest in the shares could result in Bank of America (NYSE:BAC), Citigroup (NYSE:C), JPMorgan Chase (NYSE:JPM) and Morgan Stanley (NYSE:MS), who are underwriters of the offering, to exercise an overallotment option, which could increase the number of shares offered by another 14.3 million. They have 30 days to make the decision.
Shares in General Motors increased by 7 percent in early trading on Thursday, which will help them to pay back taxpayers who essentially saved the company; something that shouldn't of happened, but here we are anyway.
GM traded at about $35.25 at 12:00 PM EDT.
Including the $4.35 billion of preferred shares and overallotment option, it would bring the IPO to be the largest in history, although shares would have to climb significantly in order for the automaker to pay generate a profit to its major investors.
The U.S. Treasury offered close to 360 million shares in the IPO at an initial value of $33 a share. GM shares will have to rise to $53 in order for the Treasury to break even in the deal.
The government paid GM $49.5 billion. Of that, about $13.6 billion will be paid back as a result of the IPO immediately.
Shares in General Motors increased by 7 percent in early trading on Thursday, which will help them to pay back taxpayers who essentially saved the company; something that shouldn't of happened, but here we are anyway.
GM traded at about $35.25 at 12:00 PM EDT.
Including the $4.35 billion of preferred shares and overallotment option, it would bring the IPO to be the largest in history, although shares would have to climb significantly in order for the automaker to pay generate a profit to its major investors.
The U.S. Treasury offered close to 360 million shares in the IPO at an initial value of $33 a share. GM shares will have to rise to $53 in order for the Treasury to break even in the deal.
The government paid GM $49.5 billion. Of that, about $13.6 billion will be paid back as a result of the IPO immediately.
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