Citi to Repay TARP as Treasury Sheds JPM Investment
The US Treasury Department is looking to shed its remaining investment in JP Morgan Chase (JPM) as another financial firm announced plans to exit a key liquidity program. Citigroup (C) on Monday revealed plans to repay $20bn of government funds through the Troubled Asset Relief Program (TARP). Citi's plans to repay $20bn the government holds in TARP trust preferred securities as well as terminate the loss-sharing agreement with the Treasury is the latest of a round of TARP repayments. "We are pleased to be able to repay the US government's trust preferred securities and to terminate the loss-sharing agreement," said Citi CEO Vikram Pandit in a statement. "We owe the American taxpayers a debt of gratitude and recognize our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need." The news of Citi's exit from TARP comes just days after the Treasury announced Friday it priced a secondary public offering of 88.4m warrants to purchase JP Morgan common stock at $10.75 per warrant. The closing is expected on or about Wednesday of this week. The Treasury said in a statement it expects $936m of net proceeds in excess of the return already enjoyed by the US taxpayer in the form of dividend payments on related preferred stock. The Treasury recently revealed that TARP -- which will be extended to October 2010 -- will end up costing $200bn less than previously expected. Write to Diana Golobay.