Citigroup Inc's negotiations to exit TARP are uncertain, but headed in the right direction, a U.S. Treasury official told television network CNBC.

The Treasury official told CNBC that Citigroup was likely to strike a deal soon.

Citigroup plans to pay back TARP by raising money in an equity offering that could be announced as early as Thursday and could be some $20 billion, CNBC reported on Wednesday, citing sources. The bank's chairman, Dick Parsons, told CNBC that Citi was in talks with regulators about repaying the funds it received from the U.S. Treasury's Troubled Asset Relief Program.

Citigroup is eager to repay the government in part to avoid restrictions on compensation. Bank of America Corp on Wednesday announced it had finished repaying the $45 billion it borrowed from the program.

In order for Citi to repay TARP, the treasury official told CNBC that the package must resolve new equity, government payback and insurance issues. It also must allow the government to unwind its position, the treasury official told CNBC.

A Citigroup spokesman declined to comment.

(Reporting by Steve Eder)

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