Will Citi Redeem the C-PN TruPS? WGA Precious Metals Top 25
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August 10, 2026 | In this issue of The Institutional Risk Analyst, we review the latest results for the WGA Precious Metals Top 25. Subscribers to the Precious Metals Top 25 have access to the full test group of 47 stocks and ETFs. Sometimes the names at the bottom of the distribution are more interesting than the top group. But first we consider the process of changing the liability structure of Citigroup (C), one of the most improved of the large US banks in recent years.
A reader of The IRA named Geoffrey very kindly drew our attention to a piece this past week in Barron’s predicting the demise of the beloved Citigroup Capital XIII TR PFD SECS (C-PN) of 2040, which we own in size. Barron’s has been wrong over the years about the potential redemption of the C-PN TruPS. Are they wrong this time as well?
Rumors of a redemption have pushed C-PN TruPS prices down since the the July 14th Citi earnings announcement. Is this a buying or selling opportunity? More agentic manipulation? Whence comes all of this bother?
First and foremost, in July Citigroup announced the redemption of $1.5 billion aggregate liquidation preference of 6.250% Fixed Rate/Floating Rate Noncumulative Series T Preferred Stock. This and some banal comments on the earning call apparently caused a sell-off in the TruPS C-PN securities as well. Click on the chart below to see the latest pricing on Yahoo Finance.
Earlier in the year, Citi had issued a new preferred, C-PR, which is now also trading below par because of fears of an imminent redemption. Hello. Obviously there is not a lot of risk for the new C-PR preferred to be called, but no matter. Retail investors are running away from the uncertainty. Perhaps Citi IR should issue a comment?
Yet the fact is that investors have reason to worry. Over the past three years, Citigroup has called and redeemed nine series of preferred stock as part of its ongoing liability and capital management strategy. Instead of buying back common shares, Citi has been retiring expensive preferred equity.
Timeline of Called Citigroup Preferred Series
Series T Preferred Stock: Called on July 16, 2026, with a redemption date of August 15, 2026 ($1.5 billion aggregate liquidation preference).
Series X Preferred Stock: Called on February 5, 2026, with a redemption date of February 18, 2026 ($2.3 billion aggregate liquidation preference).
Series W Preferred Stock: Called on December 3, 2025, with a redemption date of December 10, 2025.
Series V Preferred Stock: Called on January 24, 2025, with a redemption date of January 30, 2025.
Series P Preferred Stock: Called on April 15, 2025. (Note: Announced/redeemed in spring 2025).
Series M Preferred Stock: Called on July 16, 2024.
Series U Preferred Stock: Called on August 28, 2024, with a redemption date of September 12, 2024 ($1.5 billion aggregate liquidation preference).
Series D Preferred Stock: Called on April 15, 2024, with a redemption date of May 15, 2024.Series J Preferred Stock: Called on February 28, 2024, to redeem the remaining outstanding shares ($550 million aggregate liquidation preference).
Earlier 2023 preferred calls included Series K in October 2023 and Series A in September 2023, rounding out the post-2008 preferred calls.
Another factor in the recent selloff of C-PN was a phrase in the Citi Q2 2026 earnings call: “As a reminder, we will continue to look for opportunities to drive structural efficiencies including severance to improve productivity and actions to improve our funding profile.”
Citi’s funding cost vs average assets is just under 3.25% vs less than 1.8% for Peer Group One, the top 100 banks in the US above $10 billion in assets. With Citi earning over 11% on average common equity (RoCE), its does not seem obvious to us why the TruPS represent a drag on earnings.
Source: FFIEC
Even with all of this, however, the fact remains that the C-PN TruPS have been callable since 2015. Why is the market is reacting to this fact now because of the latest call for the Series C-PT preferred? Or is there something else is the wings?
Not All Preferred are the Same
The first and most compelling reason for Citi to keep the C-PN TruPS is the fact that they are irreplaceable. The Collins Amendment (Section 171 of the 2010 Dodd-Frank Act) required large U.S. bank holding companies to meet minimum leverage and risk-based capital requirements.
A primary consequence of the Collins Amendment was the phasing out of trust preferred securities (TruPS) as high-quality Tier 1 capital for all large bank holding companies – except Citigroup.
At the end of 2008, a cumulative total of nearly 1,400 U.S. lenders and bank holding companies had issued $149 billion in Trust Preferred Securities (TruPS). Most of the issuance activity peaked prior to 2008 (largely between 2000 and 2007) via pooled TruPS CDOs. The market saw very little new issuance as the 2008 financial crisis unfolded because these debt-like securities no longer counted as Tier One capital.
Some other bank trust preferred securities remain outstanding, though very few large, publicly traded exchange-listed retail issues like Citigroup’s famous C-PN survive in active public circulation. Unlike many legacy trust preferred securities from other large institutions that were completely phased out due to the Collins Amendment, Citi's Capital XIII issue maintains its regulatory Tier 1 status even though it is treated as debt for tax purposes. The tax treatment of dividends alone mitigates in favor of retaining the TruPS.
Citi’s common dividend yield is 1.99% as of Friday’s close, but those are after-tax dollars paying the dividend. Unlike the new C-PR and the other post 2010 preferreds, the coupon on the TruPS is treated as debt interest and thus a pre-tax expense for Citi. Also, the book carrying cost of the TruPS is a steep discount to par. A redemption at face value would imply a substantial $600 million accounting loss vs the $2.25 billion par value.
We’ve noted in The IRA (“Earnings Setup: Top Seven Banks | BAC, C, JPM, TFC, PNC, USB & WFC”), that Citi does need cheaper funding, but to us that means buying some juicy core deposits in the form of an under-performing regional bank like Truist (TFC). Does retiring the C-PN TruPS move the needle in terms of improving the bank’s funding, especially on an after-tax basis? Not really, but the market action in the security certainly suggests that something may impend.
In 2023, Barron’s noted that the TruPS are “[g]randfathered under post-financial crisis capital rules, they function with tax-deductible interest mechanics for the bank, which incentivizes Citigroup to weigh the carrying cost against prevailing interest benchmarks.”
Will the Citi C-PN TruPS be called? Only time will tell, but if they are not called then there is a rather striking buying opportunity in the market today for income oriented investors. With the latest kerfuffle pushing C-PN TruPS prices down toward par, we may go buy some more.
The big question for our friend Andrew Barry at Barron’s is this: If calling the C-PN TruPS makes sense today, then why didn’t Citi call these securities back in 2023 or earlier? The TruPS have the highest nominal coupon rate of all preferred, but among the lowest after-tax cost.
If retiring these last remaining grandfathered large bank TruPS makes sense today, why didn’t Citi call them in 2023 or even before? That's a good question for Mike Mayo to ask CEO Jane Fraser in the Q3 earnings call.
The WGA Precious Metals Top 25
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