Bank shares for sale: at what price?

It has recently been reported that the US government is preparing to sell its 27% stake in Citigroup during 2010. The US Treasury says 7.7 billion shares in the bailed-out bank are to be sold. At Citigroup's opening share price of $4.39 on 29th March 2010, the Treasury's stake is valued just over $33bn, making it $8bn profit, as the shares were acquired for $25bn as part of the $700bn Troubled Asset Relief Program.

A sale of these proportions would mark another stage in the re-building of confidence in the financial markets in general and Wall Street's recovery from recession in particular.

But who will buy these shares? At what price? And what is the effect on the bank's balance sheet? Like any market there is a need for buyers and sellers, both taking a view that the price represents good value.

Our finance courses explore the balance sheet impact of share sales, the ‘risk vs reward’ question asked by investors and why confidence plays a part in share price performance.