Citigroup Inc. (C) could raise money through a $20 billion equity offering to repay the bailout money it has received from the government for its participation in the Troubled Asset Relief Program (TARP) at the height of the credit crisis last year.

Citigroup’s chairman, Vikram Pandit, has revealed yesterday that the company is in a position to be able to repay TARP, but is awaiting government approval. Yesterday, Bank of America Corp. (BAC) announced that it had completed repaying its $45 billion of TARP funds following its $19.3 billion of equity offering last week. This has increased the pressure on Citigroup and Wells Fargo & Co. (WFC), both of which have also received significant amounts of TARP fund. In June, major banks including Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS) paid back their bailout money.

Citigroup had received $45 billion of TARP funds last year. Later, around $25 billion of that was converted into common stock, representing around 34% of its stake, which is held by taxpayers. Citigroup has the remaining $20 billion in TARP funds to repay.

Additionally, the future of the insurance policy that guarantees over $300 billion of Citigroup’s troubled assets provided by the Federal Deposit Insurance Corporation needs to be decided upon. The payment for that insurance was made by Citigroup through a preferred stock offering to the government. The government is also expected to disclose its plan for the sale of its 34% stake.

If Citigroup is allowed to make the equity offering and raise money for the repayment of the TARP funds, the bank would be free from government involvement in its affairs and pay restrictions.

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