Talk of bank nationalization is heating up. The Wall Street Journal, and The Financial Times report that the government may take up to a 40 percent stake in Citigroup, citing unnamed sources close to the negotiations, though the Journal suggests that bank executives are hoping the stake will be closer to 25 percent. Citi has apparently proposed a plan for the increased government stake to regulators, while the Obama administration hasn’t yet said whether it’s behind such a deal. If the government does take a 40 percent stake, it would constitute its largest ownership in a financial institution, behind the 80 percent it now owns in insurer American International Group. The government already controls a 7.8 percent stake in Citi.

Meanwhile, the Federal Reserve, FDIC and Treasury issued a joint statement today that said the nation’s banks are well capitalized, and that they would prefer to keep the financial system in private hands. From the statement:

If a government’s Capital Assistance Program set to begin February 25 finds that certain banks don’t have enough capital, these “institutions will have an opportunity to turn first to private sources of capital. Otherwise, the temporary capital buffer will be made available from the government…Any government capital will be in the form of mandatory convertible preferred shares, which would be converted into common equity shares only as needed over time to keep banks in a well-capitalized position and can be retired under improved financial conditions before the conversion becomes mandatory.”

UBS Looks For Wiggle Room

As for those 50,000 pesky tax-evaders that sheltered their money in UBS accounts, the bank has said it would have to break Swiss law in order to reveal their identities, Reuters reports. The firm had already agreed to hand over 250 client names as part of a $780 million settlement with U.S. prosecutors.

Nigerian Scams Citi

In other news, a Nigerian man living in Singapore tried to swindle Citibank out of $27 million. From The New York Times:

“Paul Gabriel Amos, 37, a Nigerian citizen who lived in Singapore, worked with others to create official-looking documents that instructed Citibank to wire the money in two dozen transactions to accounts that Mr. Amos and the others controlled around the world.

The money came from a Citibank account in New York held by the National Bank of Ethiopia, that country’s central bank. Prosecutors said the conspirators, contacted by Citibank to verify the transactions, posed as Ethiopian bank officials and approved the transfers.

Mr. Amos was arrested last month as he tried to enter the United States through Los Angeles, a prosecutor, Marcus A. Asner, said in Federal District Court in Manhattan.”