Citi to repay $20 bn bailout funds

Citigroup said it will repay USD 20 billion bailout money to the US government.

Citigroup today said it will repay USD 20 billion bailout money to the US government,a move that will ease strict government regulations on the financial services provider.

Citi,which was among the severely hit by the financial turmoil,had received USD 45 billion from the government as part of the Troubled Asset Relief Programme (TARP),an initiative which mainly pumped in billions of dollars into battered companies.

Vikram Pandit-led Citi has reached an agreement with the US authorities to payback USD 20 billion of TARP funds. Citi would also terminate loss-sharing pact with the government.

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Citi has to pay back only USD 20 billion,since the government got a 34 per cent stake in Citi for USD 25 billion.

Citi would be the latest to exit TARP after Bank of America,which repaid bailout funds of USD 45 billion this month.

Once Citi repays the USD 20 billion of TARP trust preferred securities and upon termination of the loss-sharing agreement,it will no longer be deemed to be a beneficiary of exceptional financial assistance under TARP beginning in 2010, it said in a statement.

Citi would immediately issue USD 20.5 billion of capital and debts. These would include USD 17 billion of common stocks,with an over-allotment option of USD 2.55 billion.