WASHINGTON (Reuters) - The Treasury said it was selling the last of its securities in banking giant Citigroup (C.N) on Tuesday for an estimated $894 million, boosting government profits earned from bailing out the company during the financial crisis.
The Treasury said the sale will leave taxpayer profit on the bailout of Citigroup at $13.4 billion.
Citigroup was one of the biggest banks bailed out by the U.S. government under the Troubled Asset Relief Program, or TARP, which was launched in 2008 as the financial crisis hit a fever pitch. The program is widely credited with saving the U.S. financial system from collapse following a burst housing bubble.
The Treasury said on Tuesday the sale of its Citigroup subordinated notes would close out its investments in the company, which once totaled $45 billion.
“Today’s transaction is part of our continuing efforts to wind down TARP’s bank investment programs,” Treasury Assistant Secretary Tim Massad said in a statement.
The notes priced for sale on Tuesday were part of a complicated support program under which various government agencies propped up some of the country’s biggest banks.
As the financial crisis accelerated, the agencies agreed to share potential losses on a $301 billion pool of toxic assets held by Citigroup.
Citigroup gave both the Treasury and the Federal Deposit Insurance Corp so-called trust preferred securities, or TruPS, to compensate for the guarantee. The $894 million the Treasury expects to receive on Tuesday is for winding down a portion of those securities.
The FDIC continues to hold Citigroup TruPS.
Reporting by Jason Lange; editing by Carol Bishopric