Citigroup Announces Buyback, Dividend Plans
Citigroup Announces Buyback, Dividend
Plans
Citigroup Inc announced on Monday it will reinstate a shareholder dividend at 1 cent per share during 2011'a second quarter after a planned 1-for-10 reverse split of its commons stock. The bank, which received the largest bailout from taxpayers during the recent financial crisis, will reportedly exchange one new share for every 10 shares of common stock after trading closes on May 6th, the bank said in a statement released Monday.
Analysts say that the move is largely intended to repair the bank's image, after it was tarnished by the bailout as well as allegations that a number of large US banks improperly foreclosed on thousands of US homes. The move follows announcements made last week in which Wells Fargo, JPMorgan Chase, and four other banks said they would initiate some $16.2 billion in share buybacks and renew dividends after the Federal Reserve said they had passed a new round of stress tests and could begin dividend payments.
Citigroup CEO Vikram Pandit had said last October that the bank would not resume any capital redistribution for shareholders until 2012, reiterating that sentiment during a January 18th conference call with analysts. “Citi is a fundamentally different company than it was three years ago,” Pandit said Monday. “The reverse stock split and intention to reinstate a dividend are important steps as we anticipate returning capital to shareholders starting next year.”
The reverse stock split makes sense for the bank, analysts say, because Citigroup has almost three times as many outstanding shares as any other company traded on the S&P 500. The bank's 29 billion outstanding shares will be reduced to about 2.9 billion by the reverse split.
Citigroup Inc announced on Monday it will reinstate a shareholder dividend at 1 cent per share during 2011'a second quarter after a planned 1-for-10 reverse split of its commons stock. The bank, which received the largest bailout from taxpayers during the recent financial crisis, will reportedly exchange one new share for every 10 shares of common stock after trading closes on May 6th, the bank said in a statement released Monday.
Analysts say that the move is largely intended to repair the bank's image, after it was tarnished by the bailout as well as allegations that a number of large US banks improperly foreclosed on thousands of US homes. The move follows announcements made last week in which Wells Fargo, JPMorgan Chase, and four other banks said they would initiate some $16.2 billion in share buybacks and renew dividends after the Federal Reserve said they had passed a new round of stress tests and could begin dividend payments.
Citigroup CEO Vikram Pandit had said last October that the bank would not resume any capital redistribution for shareholders until 2012, reiterating that sentiment during a January 18th conference call with analysts. “Citi is a fundamentally different company than it was three years ago,” Pandit said Monday. “The reverse stock split and intention to reinstate a dividend are important steps as we anticipate returning capital to shareholders starting next year.”
The reverse stock split makes sense for the bank, analysts say, because Citigroup has almost three times as many outstanding shares as any other company traded on the S&P 500. The bank's 29 billion outstanding shares will be reduced to about 2.9 billion by the reverse split.
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