Citigroup Inc may book a gain of as much as $10 billion by selling control of its brokerage to Morgan Stanley, helping to replenish capital depleted by the biggest losses in the bank's history, a person familiar with the talks said.

The pretax gain would come from writing up the value of Citigroup's Smith Barney unit to a new price set by the deal, said the person, who declined to be identified because the talks are confidential.

The gain of $5 billion to $6 billion after taxes would flow into Citigroup's capital, a loan-loss cushion so eroded that the New York-based bank had to get $45 billion of rescue funds last year from the US government. "You're selling out the future to get through the crisis of the present, and unfortunately they don't have a lot of other choice," David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller in New York, said in a Jan 9 interview. The worst banking crisis since the Great Depression forced Citigroup Chief Executive Officer Vikram Pandit to abandon his pledge not to sell Smith Barney. For the past decade, the unit has been at the center of the bank's plan to provide bond-underwriting, savings accounts and investment advice under a single umbrella. Former US Treasury Secretary Robert Rubin who had opposed calls to break it up, said Jan 9 that he plans to quit the board.