The US government and Citigroup Inc have cut a deal on the government substantially increasing its stake in the ailing bank, The Wall Street Journal reported.
The agreement, expected to be officially announced Friday morning, was expected to ease concerns over the stability of Citigroup, one of the world's largest financial institutions, the paper said in its online edition Thursday evening, according to dpa.
Quoting sources familiar with the matter, the paper said the Treasury Department would demand changes in the bank's boardroom in return for agreeing to change some of its current holdings of preferred chares into common stock, increasing its stake in Citigroup to up to 40 per cent.
Further details of the rescue deal remained unclear.
It would be the third time since October that Washington would come to Citigroup's rescue. Citigroup chief executive Vikram Pandit, who has come under fire from members of President Barack Obama's administration, was expected to keep his job but overhaul the bank's board of directors.
The Citigroup deal has created much interest, not only because of the bank's importance for the US financial system, but also as a model for future bank rescues.