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The Federal Deposit Insurance Corp. (FDIC) is selling subordinate notes issued by Citigroup Inc. (C - Free Report) worth $2.42 billion. The bonds were issued by Citigroup when the U.S. Government bailed out the company during the financial crisis.

The sale will do away with the total stake that FDIC holds in the bank. Notably, Citigroup was the only bank in which the FDIC had taken a stake.

The notes carry a maturity date of 2025 and 2043. However, Citigroup will not obtain any proceeds from the sale.

The FDIC received the notes from Citigroup as part of a loss-sharing agreement that the bank had signed with the FDIC, the Treasury Department and the Federal Reserve at the end of 2008, related to losses on assets worth $301 billion.

In return for the loss-sharing aid provided by the Treasury, Citigroup issued about $4 billion of its perpetual preferred stock and gave more than $3 billion of its preferred stock to the FDIC.

New York-based Citigroup was one of the worst hit banks during the financial crisis. The Treasury Department bailed out Citigroup with $45 billion, a large sum in the rescue program. Citigroup later repaid the bailout.

The elimination of the Treasury’s stake in Citigroup proves that the bank has come a long way since 2008, when it had to take a bailout to survive the economic downturn. The clearance of the stress test this year showed that Citigroup’s efforts to streamline its operations have borne fruit. Over the past few years, the company has been restructuring its business, making several layoffs, selling assets and trimming costs.

We believe that with the exit of the Treasury’s stake, Citigroup will be able to concentrate more on developing its core operations and boosting revenues in the upcoming quarters. Investors can consider Citigroup to be a sound investment option, given its global footprint and attractive core business.

Citigroup currently carries a Zacks Rank #3 (Hold). Other better-performing banks include BankUnited, Inc. (BKU - Free Report) , Glacier Bancorp Inc. (GBCI - Free Report) and Preferred Bank (PFBC - Free Report) . All these stocks carry a Zacks Rank #1 (Strong Buy).

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