Citigroup Inc may need to generate up to $10 billion in new capital to meet the requirements of the U.S. government's stress tests, the Wall Street Journal reported on its website on Friday,

Like other financial institutions, the bank is in talks with the Federal Reserve about whether it needs more capital, the Journal said, citing unnamed sources.

Citigroup may need less if regulators accept its arguments about its financial health. In a best-case scenario, Citigroup could have a roughly $500 million cushion above what the government requires, the paper reported.

Calls to Citigroup were not immediately returned. A spokesman for the U.S. Treasury had no comment.

The government created the stress tests as a way to measure the capital needs of the nation's 19 largest banks and their ability to withstand a variety of economic scenarios.

According to a government source, the results are expected to be released to banks on Tuesday and publicly on Thursday.

Analysts believe the government will say all 19 banks are solvent, but that some will need to drum up more capital than others to cushion themselves as the U.S. recession deepens.

The results are expected to show that the banks must raise about $150 billion or more in fresh capital, a scenario that is likely to test the stocks of the neediest banks next week.

(Reporting by Deepa Seetharaman; Editing by Richard Chang)