May 31 - As part of ongoing efforts to wind down and recover the remaining Capital Purchase Program investments under the Troubled Asset Relief Program, the U.S. Department of the Treasury has announced that it intends to auction its warrant positions (the CPP Securities) in the following 16 institutions:
These institutions have either repaid Treasury’s preferred stock or Treasury has already sold its investment in these financial institutions. The proceeds of these warrant sales will provide an additional return to the American taxpayer from Treasury´s investments in these financial institutions beyond the dividend payments it received on the related preferred stock.
These auctions are part of the overall strategy that Treasury outlined for winding down its remaining TARP bank investments in a way that protects taxpayer interests, promotes financial stability and preserves the strength of our nation’s community banks. Treasury indicated that it intends to use a combination of repayments, restructurings, and sales to manage and recover those remaining investments.
Taxpayers have already earned a significant profit from TARP’s bank programs. Through the CPP, Treasury has recovered $271 billion to date through repayments, dividends, interest and other income – compared to the $245 billion initially invested. Approximately $2 billion of the repayments were refinanced under the Small Business Lending Fund. Congress created the SBLF outside of TARP and required Treasury to let CPP institutions repay TARP funds by borrowing under that program. Treasury has remaining outstanding CPP investments in 151 institutions. For more details on Treasury’s lifetime cost estimates for TARP programs, please visit Treasury’s Monthly 105(a) Report to Congress on TARP here.
Treasury expects to commence the auctions, which will be offered principally to qualified institutional buyers and certain institutional accredited investors, at 4:00 p.m., EDT, on June 3, 2013. The auctions are expected to close at 6:30 p.m., EDT, on June 5, 2013. These offerings will be executed using an auction methodology that establishes a market price by allowing investors to submit bids at specified increments similar to the process Treasury has used to auction other CPP investments. Each warrant position will be sold to a single winning bidder. Treasury expects to conduct similar auctions in the future for other warrant positions it holds in financial institutions whose preferred stock Treasury has already sold or whose issuer has paid back its investment.