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US weighs further steps for Citi if needed

US officials are examining what fresh steps they may need to take to stabilize Citigroup Inc if its problems mount, the Wall Street Journal said, citing people familiar with the matter.

Federal officials described the discussions, which are wide-ranging and preliminary, as “contingency planning,” and no new rescue was imminent, the people told the paper.

Regulators are trying to ensure that they are prepared if Citigroup takes a sudden turn for the worse, which they are not expecting, the people told the paper.

The Journal cited Citi executives as saying that they have not detected signs of corporate clients or trading partners withdrawing their business, even though the company's shares are hovering near $1 apiece.

Citigroup said it has a strong liquidity position and that its capital levels are among the highest in the banking industry, according to the paper.

The Citigroup discussions come as US officials are conducting “stress tests” on the largest banks to determine their long-term viability under tough economic scenarios, the paper said.

Banking regulators and Treasury officials called Citigroup executives over the weekend amid rumors about the discussions, the paper said, citing people familiar with the matter.

A Citigroup spokesman in Hong Kong had no comment on the report when contacted by Reuters.

The cost to insure the debt of Citigroup with credit default swaps jumped to a record on Monday as investors worried over the fate of the bank amid massive credit related losses

The New York-based bank has received $45 billion from the taxpayer-funded Troubled Asset Relief Program, and last month agreed to give the government up to a 36% equity stake in the company to bolster its capital base. (Reuters)