Citi starts conversion of stocks worth $58 bn

Financial services behemoth Citigroup has started the conversion of preferred securities worth $58 billion into common shares, a move that will also make the US government the largest stakeholder in the entity.

As part of the process, Citi would convert a portion of the preferred securities to the tune of $25 billion held by the Federal government into common stocks.

The initiative would bolster the company's equity base, which has been severely battered last year in the wake of the financial turmoil.

"Citi will convert into common shares about $58 billion in aggregate liquidation value of preferred stock and trust preferred securities," the firm said in a statement today.

Further, the entity has reached a definitive agreement with the US government for the swapping of a part of its $25 billion-worth preferred securities into common shares. The conversion would give the Federal government about 34 per cent stake in the company, also making it the biggest shareholder.

"Following completion of the exchange offers, Citi will be among the best capitalised banks in the world. Our employees have worked tirelessly to get Citi fit by taking control of our balance sheet and expenses," Citi CEO Vikram Pandit said.