) announced the redemption of its preferred securities worth
about $94.3 million. The redemption includes 8.5% Series F
Non-cumulative Preferred Stock and 6.5% Series T Convertible
Non-cumulative Preferred Stock.
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The former will be redeemed on Jun 15, 2013, whereas the latter
carries a redemption date of Jun 17, 2013. Holders of Series F
shares will receive a quarterly dividend of 53.125 cents on the
day of redemption. Further, the holders of Series T shares will
receive $50.0, along with $28.8889 cents in accrued and unpaid
dividends from the last payment date till Jun 17, 2013.
The redemption depicts Citigroup's efforts to make its funding
and capital structure more efficient under the Basel III
standards. Notably, beginning 2012, the company has paid off
$22.7 billion of senior debt, subordinated debt, preferred and
trust preferred securities, including the current redemption.
The planned redemptions will not affect Citigroup's Tier 1 common
capital and related Tier 1 common ratio, either under Basel I or
as estimated under Basel III. However, Citigroup's Basel I Tier 1
capital and its Basel 1 Tier 1 capital ratio are anticipated to
reduce by approximately $94 million and 1 basis point,
Citigroup's decision to redeem preferred securities comes
subsequent to the Federal Reserve's approval for the company's
planned capital actions under 2013 Comprehensive Capital Analysis
and Review (CCAR).
Other banks that received clearance from the Fed to proceed with
their planned capital actions include
Bank of America Corporation
Wells Fargo & Company
). The Fed's approval of capital plans for most of the major U.S.
banks indicates considerable stability in the banking system.
Moreover, for banks, this development will help boost
Citigroup currently carries a Zacks Rank #3 (Hold).