Citigroup and Wells Fargo struck deals last night to repay a total of $45 billion in state aid, winding down a year-long US government effort to save the banking sector from wholesale collapse.
The firms were the last banking giants to repay loans from state bail-outs that totaled over $300 billion across the sector under the Troubled Asset Relief Program (TARP).
Facing a global economic meltdown not seen since the Great Depression of the 1930s, the US Treasury at the end of 2008 stepped in with the series of bail-outs to stabilise the financial system and keep credit flowing.
Citigroup unveiled its plans to repay $20 billion in state aid and outlined plans to emerge from their massive bail-out, while Wells Fargo said it would return the $25 billion TARP loan.
'We are pleased to be able to repay the US government's trust preferred securities and to terminate the loss-sharing agreement,' said Citigroup chief executive Vikram Pandit.
'We owe the American taxpayers a debt of gratitude and recognise our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need,' he added.
The government injected a total of $45 billion in the firm, once the world's biggest banking group.
Wells Fargo CEO John Stumpf acknowledged that TARP stabilised the US financial system 'when confidence in financial markets around the world was being tested unlike any other period in our history.'
Both companies said their shareholders would be taking losses in the deals, with Citi saying the repayment would result in a loss of some $8 billion, but would save the firm $1.7 billion a year in interest.
The announcements came as US President Barack Obama warned senior bank executives visiting the White House to prepare for a fight unless they drop objections to plans for the most sweeping regulatory reform.
'America's banks received extraordinary assistance from American taxpayers to rebuild their industry and now that they're back on their feet we expect an extraordinary commitment from them to help rebuild our economy,' he said.
In an interview over the weekend, Obama lashed out at Wall Street bankers saying he did not run for office 'to be helping out a bunch of fat cat bankers.'
Bank of America said last week it had completed repayment of $45 billion to the Treasury after raising new capital. The largest US bank by assets had received $25 billion under the initial programme to shore up capital in the banking system under a plan engineered by the administration of president George W Bush.
It also received an additional $20 billion to help absorb the troubled investment giant Merrill Lynch - a deal that raised hackles among lawmakers and the public because of massive losses and hefty bonuses that were not initially disclosed at the Wall Street firm.
Many banks repaid the government earlier this year, escaping tougher scrutiny from regulators that could include limits on executive pay and bonuses at bailed-out firms.
Most of the major financial institutions began repaying the government after the stress tests' that indicated how much capital they would have to raise in private markets.
