Wells Fargo & Co said on Monday it will repay the entire $25 billion it received from the government under the Troubled Asset Relief Program, after selling $10.4 billion of common shares.

Wells Fargo, the fourth largest U.S. bank, is the last of the big banks which received government rescue funding last year to announce its plans for repaying the United States. Earlier on Monday, Citigroup said it was raising $20 billion of capital to help repay the government.

In addition to selling shares, Wells Fargo plans to sell common stock to its employees' benefit plans, and raise $1.5 billion through selling assets.

If the bank does not finish those asset sales by the end of next year, it agreed to raise more common equity.

Wells Fargo said repaying the government's Troubled Asset Relief Program would eliminate $1.25 billion in annual preferred stock dividends.

But the deal will also reduce income for common shareholders by $2 billion in the fourth quarter, because the value of the preferred stock on the bank's books is lower than its face value.

Wells Fargo and Goldman Sachs will underwrite the bank's share offering, which could grow by another $1.56 billion if demand is high enough.

(Reporting by Dan Wilchins; editing by Carol Bishopric)