Citigroup Inc plans to pay back US$20B it owes the government when the bank sees more concrete signs of recovery, Chief Executive Vikram Pandit said on Wednesday. He said Citigroup has plenty of capital to use to pay back the US$20B. The comments were the bank’s most public indication that it is taking concrete steps to repay the money the government injected into Citi starting in October 2008. Sources said earlier this week that Citigroup was talking to regulators about how to repay the funds and was considering issuing US$5B to buy back trust preferred securities held by the government. Trust preferred securities have characteristics of both stocks and bonds. The US gov has injected more than US$45B into Citigroup since last October to stabilize a bank hobbled by bad securities and consumer loans. The government’s funds initially purchased preferred securities, but earlier this month about US$25B of those securities were converted into common stock, with the rest being swapped for trust preferred securities. The government’s 7.69 billion common shares are now worth about US$33B based on Citi’s Wednesday afternoon share price of US$4.23. The government can sell its shares at any time, Pandit said. The bank’s shares were up 2.7% in afternoon trading.
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