NEW YORK — The last two major national banks are returning $45 billion in aid to taxpayers, marking the latest step toward recovery for the U.S. financial system.
Citigroup, whose future looked uncertain at the beginning of this year, will repay $20 billion while Wells Fargo will pay back $25 billion.
Both banks announced significant capital raises to repay the money, and the government will also sell the one-third stake it holds in Citigroup.
The move frees the two from the close regulatory scrutiny that accompanied aid from the Troubled Asset Relief Program, which the government put in place at the height of the financial crisis in the fall of 2008. The Treasury Department said that of the $245 billion given to banks under TARP, more than $185 billion will have been repaid, including the money from Citigroup and Wells Fargo.
Most other national banks have already exited the program, releasing them from strict compensation limits that banks had said were impeding their ability to attract and retain talent. Just last week Bank of America said it would repay the $45 billion it owed, as it struggles to find a new chief executive to replace Ken Lewis, who is retiring at the end of the year.
Citi will sell $20.5 billion in stock and debt. Wells Fargo plans to sell $10.4 billion in new stock, and targets $1.5 billion in asset sales by the end of next year to boost capital.
