By Megan Davies
NEW YORK (Reuters) - Citigroup Inc.
Citi would also gain $5 billion-$6 billion in tangible common equity as a result of revaluing the unit as part of the bigger venture rather than as a stand-alone business, the source said.
The new business would have a combined estimated value of $16 billion to $20 billion, the source said.
A deal could be announced this week but is unlikely to come as soon as Monday, that source said. A second source familiar with the situation said an announcement was expected this week.
Under the deal, Morgan Stanley would take a 51 percent stake in the new venture and would also have options to increase that amount at a period of 3-6 years in the future, the first source said.
The cash payment would allow Morgan Stanley -- which has a smaller brokerage business than Citi -- to take the controlling rather than the minority stake in the venture.
The cash would be a big boon for Citigroup, which is under tremendous pressure from the U.S. government to shore up its balance sheet after taking $45 billion of government capital in October and November.
Capital is crucial for Citigroup, which has posted more than $20.3 billion of net losses for the four quarters ended Sept 30.
(Additional reporting by Dan Wilchins and Joseph Giannone; Editing by Bernard Orr)
