Citigroup chief reassures employees amid gov't takeover reports

The Wall Street Journal said late Sunday the company is negotiating with authorities to increase the U.S. government's stake in the teetering lender to as much as 40 percent.Â

 

"As you know, financial markets around the world remained under great pressure this week, again fueling speculation about additional intervention in financial institutions by the U.S. government," Pandit told Citigroup employees in a letter, according to Reuters.

 

"As we continue to navigate these unprecedented times, I want to reassure you that I remain very confident in Citi's prospects and business position around the world. Our Tier 1 capital base is very strong and is one of the strongest in the financial services industry," he added.

 

Executives would prefer to keep the government's stake closer to 25 percent, the Wall Street Journal reported citing people familiar with the situation. The talks arose after Citigroup made the proposal to regulators.

 

The Obama administration has not indicated whether it would back the plan, the Journal said. Just last week, Obama officials insisted the government is not trying to take over Citigroup or Bank of America.

 

Concerns that major Western banks like Citigroup and Bank of America Corp might have to be nationalized because of mounting bad debts caused a sharp drop in the markets last week.