Financial major Citigroup is in talks with federal officials that may lead to the US government extending its control over the struggling bank.
Quoting people familiar with the situation, the Wall Street Journal said, "Citigroup is in talks with federal officials that could result in the US government substantially expanding its ownership of the struggling bank."
"While the discussions could fall apart, the government could wind up holding as much as 40 per cent of Citigroup's common stock. Bank executives hope the stake will be closer to 25 per cent," the report added.
The move came as Citigroup's stocks dipped below $2, the lowest in 18 years. It's stocks have dropped a whopping 71 per cent this year.
The report cited people familiar with the matter as saying that government would convert a substantial chunk of the $45 billion in preferred shares into common stock.
The government had received those shares, aggregating a 7.8 per cent stake, in return for injecting $45 billion into Citigroup.
The move wouldn't cost taxpayers additional money, but other Citigroup shareholders would see their stock diluted, the daily added.