Citigroup Announces Full Redemption of Series U Preferred Stock

Rhea-AI Summary

Citigroup Inc. (C) has announced the full redemption of its Series U Preferred Stock, totaling $1.5 billion in aggregate liquidation preference. The redemption is scheduled for September 12, 2024, with a cash redemption price of $1,000 per Depositary Share. Holders of record on August 30, 2024, will receive a previously declared semi-annual dividend of $25.00 per Depositary Share on the redemption date.

This move aligns with Citigroup's liability management strategy and efforts to enhance its funding and capital structure efficiency. The decision factors in economic value, regulatory changes, potential impacts on net interest margin and borrowing costs, capital impact, and overall market conditions.

Positive

• Full redemption of $1.5 billion Series U Preferred Stock, potentially improving capital structure
• Alignment with liability management strategy to enhance funding efficiency
• Potential positive impact on net interest margin and borrowing costs

Negative

• Reduction in outstanding preferred stock may affect capital ratios
• Potential increase in cost of capital if replaced with more expensive funding sources

Insights

Financial Analyst

Citigroup's decision to redeem $1.5 billion of Series U Preferred Stock is a strategic move to optimize its capital structure. This action, set for September 12, 2024, reflects the bank's proactive approach to liability management. By redeeming these high-cost preferred shares (5.000% Fixed Rate / Floating Rate), Citi aims to reduce its overall funding costs and improve its net interest margin.

The redemption aligns with the current interest rate environment and Citi's assessment of market conditions. It's a positive sign for common shareholders, as it potentially frees up capital for more profitable uses or returns to investors. However, the impact on Citi's capital ratios should be monitored, as preferred stock redemptions can affect regulatory capital metrics.

Market Research Analyst

This redemption announcement signals Citigroup's confidence in its capital position and future earnings potential. It's part of a broader trend among large banks to optimize their capital structures in response to evolving regulatory requirements and market conditions. The move could be seen as slightly positive for Citigroup's stock, as it demonstrates proactive management and potential cost savings.

Investors should note that while this action may boost earnings per share marginally, its long-term impact will depend on how Citigroup redeploys the capital. The market will likely focus on whether this leads to increased common dividends, share buybacks, or reinvestment in growth initiatives. The redemption's timing, set for late 2024, gives Citigroup flexibility to adjust its strategy based on economic conditions and regulatory changes over the next year.

NEW YORK--(BUSINESS WIRE)-- Citigroup Inc. is redeeming, in whole, all $1.5 billion aggregate liquidation preference of Series U Depositary Shares representing interests in its 5.000% Fixed Rate / Floating Rate Noncumulative Preferred Stock, Series U (the “Preferred Stock”).

The redemption date is September 12, 2024 for the Preferred Stock and related Depositary Shares (the “Redemption Date”). The cash redemption price, payable on the Redemption Date for each Depositary Share, will equal $1,000. Holders of record on August 30, 2024, will receive the previously declared regular semi-annual dividend of $25.00 per Depositary Share payable on the Redemption Date.

The redemption announced today is consistent with Citigroup’s liability management strategy and reflects its ongoing efforts to enhance the efficiency of its funding and capital structure. Citigroup’s redemptions are based on several factors, including without limitation, the economic value, regulatory changes, potential impact on Citigroup's net interest margin and borrowing costs, the overall remaining tenor of Citigroup's debt portfolio, capital impact, as well as overall market conditions.

Beginning on the Redemption Date, the Depositary Shares representing the redeemed Preferred Stock will no longer be outstanding and dividends will no longer accrue on such securities.

Computershare Trust Company, N.A. (“Computershare”) is the paying agent for the Depositary Shares. The paying agent’s address is Computershare Trust Company, Attn: Corporate Actions, 150 Royall Street, Suite 101, Canton, MA 02021. Questions relating to the notice of redemption and related materials should be directed to Computershare via telephone at 1-888-250-3985.

For further information on the Preferred Stock and the related Depositary Shares, please see the prospectus at the following web address: https://www.citigroup.com/rcs/citigpa/akpublic/storage/public/CitiSept091219PreferredStockSeriesU.pdf

About Citi

Citi is a preeminent banking partner for institutions with cross-border needs, a global leader in wealth management and a valued personal bank in its home market of the United States. Citi does business in nearly 180 countries and jurisdictions, providing corporations, governments, investors, institutions and individuals with a broad range of financial products and services.

Additional information may be found at www.citigroup.com | X: @Citi | LinkedIn: www.linkedin.com/company/citi | YouTube: www.youtube.com/citi | Facebook: www.facebook.com/citi

View source version on businesswire.com: https://www.businesswire.com/news/home/20240828990639/en/

Media Contact:

Danielle Romero Apsilos

212 816 2264

danielle.romeroapsilos@citi.com

Fixed Income Investor Contact:

Peter Demoise

212 559 2718

peter.demoise@citi.com

Source: Citigroup Inc.

FAQ

When will Citigroup (C) redeem its Series U Preferred Stock?

Citigroup (C) will redeem its Series U Preferred Stock on September 12, 2024, which is the announced Redemption Date.

What is the redemption price for Citigroup's (C) Series U Preferred Stock?

The cash redemption price for each Depositary Share of Citigroup's (C) Series U Preferred Stock is $1,000, payable on the Redemption Date of September 12, 2024.

Will Citigroup (C) pay a dividend on the Series U Preferred Stock before redemption?

Yes, holders of record on August 30, 2024, will receive a previously declared regular semi-annual dividend of $25.00 per Depositary Share, payable on the Redemption Date.

What is the total value of Citigroup's (C) Series U Preferred Stock being redeemed?

Citigroup (C) is redeeming $1.5 billion aggregate liquidation preference of Series U Depositary Shares representing interests in its 5.000% Fixed Rate / Floating Rate Noncumulative Preferred Stock, Series U.