Ailing banking giant Citigroup and the US government have reached an agreement for the Treasury to increase its stake in the bank and demand a boardroom shakeup, US media reported Thursday.
The Wall Street Journal said in its online edition that the Treasury Department is expected to announce early Friday that it has agreed to convert some of its current holdings of Citigroup shares - obtained after it threw a $45-billion lifeline to the bank - into common stock.
"The government will convert its stake only to the extent that Citigroup can persuade private investors to do so alongside the government," the financial newspaper said, citing people familiar with the matter.
The operation would depend on how many preferred shares private investors would agree to convert into common stock. The newspaper said the Treasury's stake in the bank could rise from 30 to 40 per cent of Citigroup's shares.
The US government has imposed a condition to the agreement under which the New York-based company would shake up its 15- member board of directors. But Citigroup chief executive officer Vikram Pandit was expected to keep his post.
Citing people briefed on the discussions, The journal said Citigroup was asking for the Treasury to convert its preferred shares into common shares at a price of up to $5 a share, double the $2.46 closing price Thursday.
