Citi it's not

11 May 2011 By Agnes Crane

Exiting the insurance giant once seemed like it might turn into one of Treasury’s more profitable deals. But the reduced $9 bln offering indicates it will make less than once thought on the first slug. That will make it harder for taxpayers to make a big profit on this bailout.

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The U.S. Treasury plans to sell 200 million shares in American International Group, in which it currently has a 92 percent stake. AIG, meanwhile, will sell 100 million, according to the company's prospectus. The offering stands to raise $9 billion, based on the May 11 share price in morning trade, excluding Treasury's overallotment price. That's less than half what was expected in January.

Assuming the government sells only the 200 million shares, Treasury would still have a 77 percent stake in the company.

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