Citigroup has until December 14 or December 15 to start a capital-raising effort, after which the bank would have to likely wait until late January, after it reports quarterly results, the paper said, citing unnamed sources.
The report said the short window for a decision on the repayment of funds raises the stakes for the bank in its quest to free itself from the shackles of the U.S. government.
A U.S. Treasury Department official on Sunday night wouldn't confirm any specific discussions with Citigroup but noted that other banks have stepped forward since Bank of America's
We do not comment on individual institutions but it's fair to say that since BAC announced its intention to repay the government, others are pursuing discussions to understand what needs to be done to move ahead with repayment, the official said.
The government owns a 34 percent stake in Citigroup and is willing to sell at least some of its shares along with a capital-raising effort by the bank, FT said. But authorities remain worried about Citigroup's health, it said.
Citigroup could not immediately be reached on Sunday.
Bank of America sold more than $19 billion of equity on Thursday to raise money to help repay its bailout funds and Citigroup likely would want to follow a similar route.
Banks are eager to repay their bailout money in order to free themselves from government-set pay restrictions that they fear make them less competitive in relation to banks that have already exited the TARP program.
Treasury Secretary Timothy Geithner has also said that he prefers to see banks raise capital on their own rather than rely on the government and anticipates that the TARP program can soon be switched from propping up banks to helping small business create more jobs.
We continue to believe that banks and our financial system are better off with private capital instead of government capital, the Treasury official said.
(additional reporting by Glenn Somerville in Washington; Editing by Valerie Lee)