Federal banking regulators are pressing

Citigroup

(C) - Get Report

to replace its chairman, Sir Win Bischoff, and shake up its board in an effort to restore confidence in the banking giant, the

New York Times

reports.

Time Warner's

(TWX)

Chairman Richard D. Parsons, a Citigroup director, has emerged as the leading candidate to succeed Bischoff, the

Times

reports, citing people briefed on the situation. The change could come as early as this week.

According to the newspaper, regulators are growing increasingly concerned that Citigroup's board is struggling to regain investors' trust after the company was compelled to seek a second lifeline from the U.S. government.

The issue gained new urgency on Friday with reports that

Citigroup is contemplating a sale of Smith Barney

to

Morgan Stanley

(MS) - Get Report

, and news that Citigroup director Robert Rubin planned to resign.

Meanwhile, given the turmoil at Citigroup, the

Times

reports, many analysts and even some Citigroup insiders wonder whether CEO Vikram Pandit can hold on to his job. Parsons said Pandit has the backing of the board, according to the newspaper.

This article was written by a staff member of TheStreet.com.