FDIC in the Exchange and Public Sale of the U.S. Government’s Final TARP Investment in Citigroup

September 13, 2013

Nearly five years after the Troubled Asset Relief Program was signed into law, Cleary Gottlieb represented Citigroup and a syndicate of underwriters in connection with the public sale of the last remaining Citi securities held by the U.S. government through the Federal Deposit Insurance Corporation. Citi issued $3.025 billion of its perpetual preferred stock to the FDIC on January 15, 2009, as consideration for loss-sharing protection in connection with TARP. These securities were later exchanged for trust preferred securities of Citi. On December 28, 2012, the FDIC transferred a portion of these trust preferred securities to the U.S. Department of the Treasury, reducing its holdings to $2.225 billion.

In order to increase the marketability of the remaining $2.225 billion of Citi trust preferred securities held by the FDIC, Citi agreed to exchange these trust preferred securities for $1.42 billion of 5.500% Subordinated Notes due 2025 and $1 billion of 6.675% Subordinated Notes due 2043. The exchange took place, and the subordinated notes were issued to the FDIC, on September 9, 2013. On September 10, the subordinated notes were offered to the public in a secondary offering by the FDIC. The public sale priced that same day and closed on September 13, 2013. This transaction marks the final exit of the U.S. government as a holder of Citi securities.