Sept. 14 (Bloomberg) -- Citigroup Inc., the U.S. bank bailed out after losing $28 billion last year, will be able to repay funds from the Troubled Asset Relief Program and taxpayers will make a profit, Chairman Richard Parsons said.

“I have every confidence that Citi will be able to exit the TARP program, and actually be able to give the American taxpayer a decent return,” Parsons said today in an interview in New York with Bloomberg Television. “I can’t put a time frame on it, but I’m very confident we’ll get there.”

Parsons commented in downtown Manhattan before attending President Barack Obama’s speech on financial industry reforms. New York-based Citigroup last year got a $45 billion injection from the bailout program, and $25 billion of those funds were converted into a 34 percent ownership stake.

“There’s every reason to hope that sooner or later you’ll be able to work your way through the problem,” said Chris Kotowski, an analyst at Oppenheimer & Co. who rates Citigroup “market perform.” “It is more a matter of when and how and how long it takes.”

Even if the bank couldn’t repay all its TARP funds, the government’s stake might be redeemed through a sale to other investors, Kotowski said. Such an “exit” would depend on the market’s receptiveness, he said.

‘Near-Term Event’

“I’d be surprised if that’s a real near-term event,” Kotowski said. “I’m not sure that the market will absorb that currently.”

Citigroup fell 9 cents to $4.52 as of 4:55 p.m. in New York Stock Exchange composite trading. The shares have tumbled 14 percent since reaching a seven-month high of $5.23 on Aug. 28. The government got its shares for $3.25 each in a preferred- stock conversion.

Other financial-industry peers, including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, all based in New York, repaid their TARP funds in June.

Bank of America Corp., based in Charlotte, North Carolina, and San Francisco-based Wells Fargo & Co. will probably exit TARP before Citigroup, said Moshe Orenbuch, an analyst at Credit Suisse Group who rates Citigroup “neutral.”

“It’s probably fair to say Citigroup won’t be a part of the next round” of redemptions, Orenbuch said.

‘Commonsense’ Regulations

Obama, speaking a year after Lehman Brothers Holdings Inc.’s collapse, warned against complacency as the financial crisis ebbs and said the U.S. must have a new regime of “commonsense” regulations to avoid another market meltdown. Taxpayers have earned a 17 percent return so far on stakes repaid by banks, Obama said.

“All of us who are in the financial-services sector have to take a little bit more responsibility,” Parsons, 61, said of the push for financial reforms. “That’s why some of us are here, to show that we’re prepared to do our part.”

Parsons said there “probably will be a little bit more regulation, but the significance of it is the fact that the president wants to work with Wall Street.”

The government is “coming around to a better understanding” of competitive pressures on Wall Street, Parsons said. Obama and Treasury Secretary Timothy Geithner have criticized pay practices that encouraged risky behavior.

“We’ve got to stay competitive,” Parsons said. “Everybody gets it in sports. If you want the best players, you’ve got to compete for that talent.”

To contact the reporters on this story: Peter Cook in New York at pcook6@bloomberg.net; Bradley Keoun in New York at bkeoun@bloomberg.net.

Last Updated: September 14, 2009 17:09 EDT