AIG to be '90% owned by US Treasury'

The US Treasury's 80% ownership stake in AIG could initially increase to more than 90%, if favoured plans go ahead.

AIG will unveil a privatisation plan and a drive to repay American taxpayers in the coming weeks, while the company believes it is close to repaying emergency loans from the Federal Reserve.

Under the proposed plan, the US Treasury would convert $49.1bn of preference shares into common equity, which could be more easily sold on the stock market, according to reports yesterday.

The US Treasury would then sell the stake in portions, most likely in the first half of next year.

The federal government and the Federal Reserve advanced up to $180bn in aid to AIG when it became apparent that bets on mortgage derivatives had caused the downfall of the group.

After several restructurings, the Federal Reserve is showing a profit on some of the AIG assets it funded, and its other loads will be repaid with the proceeds from the disposal of subsidiaries including AIA and Alico.

AIG still owes $102bn overall, according to its most recent quarterly report.