Today, Treasuryannounced that it will sell trust preferred securities received from Citigroup pursuant to the Asset Guarantee Program (AGP) for not less than par value plus any accumulated and unpaid distributions.
These securities were received in consideration for Treasury’s January 2009 agreement to share potential losses on a pool of $301 billion of assets held by Citigroup. Citigroup paid the Treasury and the FDIC a premium in the form of securities for their willingness to share potential losses over a five to ten year period. The loss-sharing arrangement was terminated in December 2009 at Citigroup's request. Treasury kept $2.2 billion of the premium (which was originally $4 billion in securities). Treasury was never required to make any payment under the arrangement and has no further obligation to do so; all proceeds from the sale will constitute a net gain to the taxpayer under the program.
This offering does not include $800 million in Citigroup trust preferred securities held by the FDIC that the FDIC is required to turn over to Treasury, unless it incurs any losses on debt of Citigroup guaranteed by the FDIC under the Temporary Liquidity Guarantee Program. It also does not include the warrants for Citigroup’s common stock that were also issued as part of Citigroup’s participation in AGP and other Treasury programs. Any proceeds from the ultimate sale of those securities will represent additional gain to the taxpayer. The offering also does not include Treasury’s shares of Citigroup’s common stock which Treasury has been disposing of separately.