Arab Today, arab today aig stock sale cuts government stake
Last Updated : GMT 21:53:08
Arab Today, arab today
Arab Today, arab today

AIG stock sale cuts government stake

Arab Today, arab today

Arab Today, arab today AIG stock sale cuts government stake

Washington - Arabstoday

The US Treasury Department said on Friday it expects to raise $5 billion from its sale of American International Group stock, cutting the government’s stake in the bailed-out insurer to 55 per cent. The sale, which would bring a profit of about $300 million to the US Treasury, comes as President Barack Obama campaigns for a second term and has been forced to defend his administration’s decision to use taxpayer money to prop up companies during the crisis. The Treasury Department priced the offering at $30.50 a share, six percent above the $28.72 price needed for the US government to break even on its investment in the insurer.The government has already sold three tranches in AIG above the break even price, putting Treasury on track to make a profit when it exits the insurer. Treasury has said it will not sell below the break even level. The sale of 163.9 million shares of AIG stock will reduce the government’s holding in the insurer to 55 per cent from 61 per cent. The offering is expected to close next week. The insurer received multiple bailouts under both the Obama and Bush administrations, with the government pledging as much as $182 billion in aid. After the latest sale, the Treasury’s investment in AIG will be about $25 billion. The Obama administration has been unwinding its position in the politically unpopular financial crisis bailout programs. More than 300 small banks have yet to repay taxpayers. The administration could sell its remaining stake in AIG this year but has been adamant in saying it will not act for political reasons. The Treasury hired over a dozen financial institutions to help coordinate and run the offering, including Citigroup Inc, Deutsche Bank Securities, Goldman Sachs, JPMorgan Securities, Morgan Stanley and Credit Suisse. AIG shares closed up 1.62 percent at $31.34 on Friday. The company is still not overseen by a single regulator and is expected to be slapped with a “systemically important” label from the powerful new US council of regulators. The label would then subject AIG to new rules as well as supervision from the Federal Reserve. From:Gulfnews

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