Citi Announces New $5 Billion Municipal Lending Program Backed by TARP Capital
Citi’s TARP Capital Initiatives Total $44.75 Billion As of March 31
New U.S. Credit Commitments Totaled $120.1 Billion in First Quarter
NEW YORK – Citi (NYSE: C) announced today that it will lend up to $5 billion to state and local governments, municipal agencies, universities and non-profit hospitals to fund projects that will help create jobs and spur economic growth. The municipal program and three other new primary lending initiatives approved by Citi in the first quarter of 2009 are supported by capital the U.S. Treasury invested in the company as part of the Troubled Asset Relief Program, or TARP.
All of the initiatives are presented in Citi’s second quarterly TARP Progress Report published today and titled, “What Citi is Doing to Expand the Flow of Credit, Support Homeowners and Help the U.S. Economy.” The report can be found at www.citigroup.com.
The municipal lending program is intended to help finance the construction of schools, airports, non-profit hospitals and other infrastructure and capital projects. Loans made as part of the initiative will provide “AA”-rated municipal clients with access to tax-exempt funding for three years for capital investment projects or to refinance existing variable rate debt. Citi has already made proposals to potential borrowers totaling more than half of the $5 billion available under the program.
“Citi’s municipal lending program is designed to help communities around the country pursue infrastructure development and other projects at a time when the difficult credit environment has limited access to other funding sources,” Citi Chief Executive Officer Vikram Pandit said. “Investments in projects like schools and hospitals help create jobs and will be an integral part of our country’s economic recovery.”
In addition to providing access to funding that is currently unavailable from other sources, Citi also expects the program to lower borrowing costs and add funding flexibility for municipal clients.
First Quarter TARP Progress Report
Citi’s TARP committee has authorized initiatives to deploy $44.75 billion across key areas of the U.S. economy to help expand the flow of credit to consumers, businesses and communities. The total includes $8.25 billion in new programs approved in the first quarter. In addition to the municipal lending program, these new initiatives are:
* Supplier Financing – $2.0 billion to purchase trade receivables from small and medium-sized businesses in the United States in order to provide them with needed liquidity
* Residential Mortgages – An additional $1.0 billion in mortgages to lend to qualified borrowers to refinance their primary residences
* Auto Loans – $250 million to lend to consumers via dealerships nationwide
As of March 31, Citi had put $8.2 billion of its approved TARP capital initiatives to work in the economy, primarily to purchase mortgage securities in the secondary market, a critically important source of funds that supports lending to home buyers.
“We will continue to explore every opportunity to put TARP capital to work in a disciplined, transparent and responsible fashion over the coming quarters, consistent with Citi’s prudent lending standards,” Mr. Pandit said.
Despite the challenging economic environment, Citi has extended more than $200 billion in credit commitments in the U.S. since October 2008. These commitments include more than $120 billion in the first quarter in the form of loans to consumers and businesses as well as underwriting.
Today’s TARP Progress Report also details the substantial efforts Citi is making to support the U.S. housing market and assist borrowers who are struggling to meet their commitments in these difficult times.
Since the start of the housing crisis in 2007, Citi has worked successfully with 520,000 homeowners to avoid potential foreclosure on combined mortgages totaling more than $50 billion. Citi helped more than 80,000 borrowers stay in their homes in the first quarter of 2009 alone, with mitigation solutions outnumbering completed foreclosures by more than 10 to 1. Recognizing the rise in unemployment, Citi has taken additional steps to lower mortgage payments for homeowners who are out of work.
Citi also continues to expand eligibility for forbearance programs for credit card holders facing financial difficulty and is currently providing 1.3 million individuals with help to manage their credit card debt through a variety of programs.
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