Citi seeks $1.2 bn of buybacks

Citigroup Inc, the third-biggest US bank, asked the Federal Reserve for permission to buy back $1.2 billion of shares without seeking a dividend increase a year after its previous request was rejected.

The planned repurchases would "offset estimated dilution created by annual incentive compensation grants," the New York- based company said yesterday in a presentation on its website. The Fed won't disclose whether it approved the capital plans of the 18 biggest US banks until next week.Chief Executive Officer Michael Corbat, 52, is seeking to avoid the missteps of predecessor Vikram Pandit, who failed to convince regulators that the lender could boost shareholder rewards and survive an economic slump.

Last year's rebuff helped lead the bank's directors to conclude that Pandit mismanaged operations, a person familiar with the matter said at the time, and they replaced him with Corbat months later.

"Corbat would lose all credibility if he fails to get the capital plan approved," Richard Staite, a London-based analyst with Atlantic Equities LLP, said before the bank disclosed its request. "It would show he is not in touch with how regulators view Citigroup."

The lender's Tier 1 common ratio, a measure of financial strength, would fall to 8.3 per cent in a dire economic scenario, remaining above the 5 per cent minimum used in a separate test to weigh the impact of payouts to shareholders, the central bank said yesterday in a report. The estimate excludes Citigroup's request to buy back stock.