U.S. officials are examining what fresh steps they might need to take to stabilize Citigroup ( C) if problems mount, the Wall Street Journal reports, citing people familiar with the matter.

Citigroup and the Treasury Department agreed on a deal in late February that would give the government up to a 36% stake in the bank.

Federal officials describe the talks as "contingency planning," the newspaper reports. Regulators are trying to ensure they are prepared if Citigroup takes a sudden turn for the worse, which they aren't expecting, these people say, the Journal reports.

Citigroup executives said they haven't detected signs of corporate clients or trading partners withdrawing their business, even though the bank's stock is trading near $1. It closed at $1.05 on Monday. Citigroup says it has a strong liquidity position and that its capital levels are among the highest in the banking industry.

Banking regulators and Treasury officials called Citigroup executives over the weekend amid rumors about the discussions, the newspaper reports, citing people familiar with the matter. They said the talks were geared toward future planning and that no new rescue was imminent.

Citigroup CEO Vikram Pandit issued a memo Monday to employees Monday as the bank's shares hovered above $1, arguing the current price doesn't reflect the company's capital position and earnings power.

In addition to citing the bank's strong capital position, Pandit said Citigroup has been profitable through the first two months of the year and is having its "best quarter-to-date performance since the third quarter of 2007."

The discussions include the Treasury Department, Office of the Comptroller of the Currency, Federal Reserve and Federal Deposit Insurance Corp.

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