Citi near deal to pay back bailout money: reports

Citigroup is nearing a deal with the U.S. government that would allow it to pay back its bailout money, several reports said on Sunday.

The New York Times said Citigroup officials expect to raise about $18 billion by selling stock in a series of transactions.

The Times also said that with regulatory permission, Citigroup plans to redeem at least $20 billion of preferred stock the U.S. government received in its first two rescues of the bank. Citigroup would also exit a federal insurance policy on about $250 billion of troubled real estate and credit card assets, the newspaper said.

Citigroup officials plan to announce the program as early as Monday, according to the Times.

It also said that the U.S. Treasury Department wants to sell off its roughly 34 percent stake in the bank through a series of large stock sales over the next several months to institutional investors.

Negotiations on the deal have been ongoing for days. Sources told Reuters last Monday that Citigroup and the government disagreed over how much the bank should raise to repay taxpayers.

Citigroup has made progress with negotiations in recent days, and is hopeful it will have a deal to announce soon, a person briefed on the matter said.

Citigroup declined to comment.

The bank is eager to repay the government so it can avoid the executive pay restrictions that come along with the three rounds of U.S. assistance it received.

Citigroup borrowed $45 billion last year under TARP. This year, the government agreed to convert $25 billion of those funds into Citigroup common stock, leaving the United States with a roughly 34 percent stake in the bank.

Bank of America Corp , the largest U.S. bank, finished repaying the $45 billion it had borrowed under TARP last week using a mix of cash from its corporate coffers and money raised as part of a $19.29 billion securities offering.

President Barack Obama is set to meet with the heads of top U.S. banks such as Goldman Sachs , JPMorgan Chase & Co and Citigroup and will call on them to take responsibility for helping the economy after benefiting from taxpayer-funded bailouts of the financial sector.

Earlier on Sunday, the Wall Street Journal reported the bank was nearing a deal with the U.S. government that would allow it to pay back only some of its bailout money. The paper cited people familiar with the matter.

The Journal said the proposed deal would allow the bank to raise more than $10 billion in new capital by issuing common stock, which would help Citigroup pay back some of its bailout money. The bank's executives hope to announce a deal as early as Monday morning, the report said, noting that the agreement is not finalized and may not be done by then.

But a partial repayment would dilute shareholders without providing them with the benefit of being out of the Troubled Asset Relief Program, and most importantly, without getting out from under the pay restrictions.

Still, a plan to extract itself from government control over time could reassure investors.

(Reporting by Michael Erman and Dan Wilchins, editing by Martin Golan, Diane Craft and Muralikumar Anantharaman)