A $20bn Xmas present from Citigroup

Citigroup Payback

What really gets the US tax payer going, is that they have pretty much no say at all as to where their tax money goes. So when Obama chose to use it to bail out those greedy banks that lost it all in the first place, it is no surprise that people were outraged.

But Citigroup are offering US tax payers an early Christmas by repaying $20 billion of US bail-out funding, saying that it owes them a "debt of gratitude". The move marks its exit from the US government's Troubled Asset Relief Program (Tarp).

Citigroup is the last of the big US banks to leave the support mechanism, and will issue $17 billion in new shares to help finance the move. In theory, in what will be less welcome news to the average American, it means it can now avoid pay restrictions on its top 100 employees.

Months of haggling

As part of the government's rescue plan, Citigroup received $45 billion but because the US government converted the rest into a stake in the company, they only have to repay half this amount. The government now owns 34 percent of the bank, but plans to sell these shares within the next 12 months.

The deal brings to an end months of haggling over whether Citigroup was healthy enough to emerge from government protection and exactly how that should be accomplished. It is a victory for Chief Executive Vikram Pandit, who took over Citigroup in the midst of the financial crisis and faced the prospect of being the last major Wall Street bank still deeply entangled with the government, a status that could have left the bank at a competitive disadvantage.

Repayments are an encouraging sign

The Tarp assisted 700 US banks, with most finding it easy to repay bail-out money because it came with restrictions such as caps on executive pay and dividends.

The Bank of America paid back its $45 billion last week.

The repayments are an encouraging sign that the US is beginning to emerge from recession, as the US Treasury said in a statement:

"While much work lies ahead to improve lending and spur job creation, today's announcement by Citigroup takes us another step in the right direction."

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