The US government may end up holding as much as 40 percent of Citigroup's common stock, the Wall Street Journal said on its website on Sunday.

Citigroup Inc. is in talks with federal officials that may increase the government's ownership of the bank, the report said.

While the discussions could fall apart, the government could wind up holding as much as 40 percent of Citigroup's common stock. Bank executives hope the stake will be closer to 25 percent.

Shares of Citigroup fell about 20 percent on Friday, hitting a low of US$1.61 on the New York Stock Exchange, the lowest since 1991, after Senate Banking Committee Chairman Christopher Dodd said it may be necessary to nationalize some banks for a short time.

The New York-based bank has so far received US$45 billion from US government aid. After losing more than 90 percent of their value, the market capitalization of the financial firm is now well below the amount of government assistance.

Concerns about bank nationalization have mounted as Alan Greenspan, the former Federal Reserve chairman, also said earlier this week that the US government may have to nationalize some banks on a temporary basis to fix the financial system and restore the flow of credit.

Panic amid investors increased as Fed Chief Ben Bernanke considered nationalization as an option.

The White House said on Friday it strongly believed in a privately held banking system, after rumors of bank nationalization hit Wall Street.

"This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring they are regulated sufficiently by this government," White House spokesman Robert Gibbs said.

The US Treasury Department will release more details of the Obama administration's bank rescue plan next week.

(Xinhua News Agency February 23, 2009)