Citigroup and the US government have reached a deal that will allow the bank to repay $20 billion in TARP loans, after weeks of wrangling over the bank's health. Citi will raise $20.5 billion, $17 billion of it in common stock, the company said in a statement, a sign that the government's still worried about its cash reserves. At the same time, the government will sell $5 billion of the Citi common stock it currently holds, with the remainder of its 35% stake gradually sold off within the next 6-12 months.
The bank will issue another $1.7 billion in stock to employees, instead of cash bonuses. "We owe the American taxpayers a debt of gratitude," said CEO Vikram Pantit, "and recognize our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need." The bank added that by Dec. 31 it will have paid $3.1 billion in dividends and interest to the government.