NEW YORK ( TheStreet) -- Citigroup ( C - Get Report) and the Treasury Department are discussing a plan on how the government can reduce or sell its 34% stake in the bank. The Treasury may begin unloading the stake as soon as October, Bloomberg reports, citing people familiar with the matter. The Treasury's aim is to sell the holdings over the next six to eight months. The U.S. government acquired 7.7 billion shares of Citigroup last week, which it received under a preferred-for-common stock conversion that was part of the plan when it bailed out the bank with $45 billion. A formal plan for the sale of hasn't been developed by the Treasury Department, but it is considering options, including selling shares to the public in blocks over six to eight months, selling a small amount of shares daily or weekly, or selling the entire stake in a managed offering, according to Bloomberg. Citigroup's shares closed Monday at $4.52. The U.S. government converted its preferred shares into common stock at $3.25 a share, meaning the Treasury's profit could be about $9.8 billion. The Wall Street Journal , meanwhile, reports Citigroup executives have been working on plans for a possible multibillion-dollar stock offering in which the bank would issue new shares to the public, while the Treasury would sell at least a portion of its Citigroup stake. The Journal's report cited people familiar with the matter. Citigroup hasn't held in-depth talks with the government, the Journal reports. Citigroup called a Treasury official over the weekend and said it wanted to start talking about paring down its investment.
The Journal reports the tentative aim is for a joint stock sale. Under the scenario, Citigroup would issue as much as $5 billion in new shares, while the government would simultaneously sell an undetermined amount of the stock it is holding, the people familiar with the matter said. -- Reported by Joseph Woelfel in New York . Follow TheStreet.com on Twitter and become a fan on Facebook.