Citigroup begins $58 billion stock swap

Citigroup Inc on Wednesday began a long-delayed $58 billion stock swap that could leave the government with a 34 percent stake in the nation's third-largest bank.

Citigroup plans to swap common stock for as much as $33 billion of preferred shares, and convert as much as $25 billion of preferred shares held by the U.S. Treasury into common stock.

Citigroup said the swap could make it one of the world's best-capitalized banks, adding up to $61 billion of tangible common equity and $64 billion of Tier-1 common equity. It had planned to begin the swap in April.

The exchange offer could result in the issuance of more than 17 billion new common shares, diluting the holdings of existing investors by 76 percent. The public exchange offers expire July 24.

Citigroup shares closed Tuesday at $3.41.