Citigroup completes $58 billion stock swap

NEW YORK -- Citigroup Inc. has completed its $58 billion stock offering, a move that strengthens the struggling bank's balance sheet and makes way for the U.S. government to take ownership of a 34 percent stake.

Citi ( C - news - people ) said late Sunday that nearly all public holders of its preferred and trust preferred securities agreed to swap their shares for about 5.83 billion shares of common stock. The New York-based bank on Thursday had completed a $12.5 billion exchange that swapped preferred securities held by private debt holders for interim securities and warrants that will eventually be converted into common stock.The government carried out a separate exchange Thursday, swapping $12.5 billion of its preferred shares in the bank for securities and warrants as well, and will again exchange another $12.5 billion shortly.

"The successful completion of the exchange offers marks a significant milestone for Citi," said Vikram Pandit, Citgroup CEO, in a statement Sunday. "Citi will have approximately $100 billion of Tangible Common Equity (TCE) and a Tier 1 Common ratio of approximately 9 percent based on our June 30 results. That unquestioned financial strength combined with our strategy to return Citi to its core franchise of institutional and consumer businesses spanning an unmatched global footprint are driving Citi's return to sustained profitability and growth."

Citigroup said in late February it wanted to offer investors the option of exchanging preferred stock into common stock as a way to boost its capital reserves. The government agreed to convert about $25 billion of its $45 billion preferred investment in the bank to common stock, which will give it a 34 percent stake in the bank. link.....