New York -  US banking firm Citigroup is in negotiations to sell 12 billion dollars worth of bad loans to a group of financial institutions in an effort to reduce the effects of the US credit crisis on its balance sheet, US media reported Wednesday.

According to an unnamed source quoted by the Bloomberg news agency, the sale of the loans to Apollo Management LP, Blackstone Group LP and TPG Inc are to shield the bank from further losses.

The group of private equity firms are said to be paying around 7.6 billion dollars for the Citibank loans, according to the Wall Street Journal.

The loans are part of the 43 billion dollars in financing Citigroup agreed to provide for leveraged buyouts in 2007 before the US subprime mortgage crisis struck, leaving the debt nearly impossible to sell at value, US media reported.

Citigroup shares have so far dropped 19 per cent in 2008, in part due to fears over writedowns of leveraged loans. (dpa)