Vikram Pandit, the chief executive of Citigroup, blamed the bank’s plunging share price on rumour-mongering and reiterated yesterday that its capital position was strong.

However, his words failed to halt the decline in the bank’s share price amid the expectation of a government bailout that would dilute investors’ ownership. Shares in Citigroup, which fell by 23 per cent on Wednesday and by 26 per cent on Thursday, tumbled by a further 15 per cent, or 69 cents, to $4.03 in afternoon trading on Wall Street yesterday.

The shares are being hammered amid fears that the financial crisis is far from over. Citigroup, which has raised $75 billion (£51 billion) from sovereign wealth funds and the US Government to cover its losses from the credit crunch, is expected to need between $50 billion and $100 billion of additional cash to cover further losses over the next 18 months.

Some analysts believe that Citigroup and the Government should act fast. Sean Egan, of the Egan-Jones ratings agency, said: “There is a pressing need for a capital injection from the US Government, maybe as soon as this weekend, because Citigroup has lost the faith of its investors in the past couple of weeks.”

In a conference call with staff yesterday, Mr Pandit is thought to have ruled out the possibility of selling Citigroup’s Smith Barney brokerage unit, which some analysts had suggested he might do.

However, last night the Citigroup board was preparing to meet after the dramatic fall in the bank’s share price forced directors to examine a series of strategic options, including the sale of part or all of the company.

On the same call, he said that “rumour-mongering is at the heart of our problems”. After the call, Citigroup issued a statement saying that it “has a very strong capital and liquidity position and a unique global franchise”.

The statement added: “We are focused on executing our strategy, including our targeted expense and legacy asset reductions, and we believe the benefits will be seen over time.”

Brad Hintz, a Sanford Bernstein analyst, agreed with Mr Pandit that Citigroup’s share price problems were based more on emotion than on the bank’s financial condition. “Citigroup faces no imminent losses, so it’s hard to believe a government cash injection is imminent,” Mr Hintz said.

He regards an outright sale of Citigroup as unlikely, because the US Government has indicated that it will stand behind the bank with its recent $25 billion investment. Instead, Citigroup may look to raise cash in the longer term by selling its credit card business, Mr Hintz said.

Richard Bove, a Ladenburg Thalmann analyst, said: “I have received numerous calls asking me if Citigroup is about to fail. I see no reason why this should happen. The only reason banks fail is because their cashflows turn negative and it does not appear that this is likely at this bank.

“The current decline in the stock price is reflecting a series of fears related to loans and security values that cannot be actualised without a severe setback in the economy and a very rapid rise in interest rates. It would take a depression every bit as large and long as the 1930s debacle to shake this company’s viability.”

Citigroup declined to comment beyond its statement. Its credit default swaps are not yet trading at levels that indicate extreme distress, although they widened considerably yesterday to trade at 500 basis points, or $500,000 a year for five years for every $10 million of principal protected.

Citigroup was the world’s biggest bank until February, when it was overtaken by the Industrial and Commercial Bank of China. Citigroup is now only the fifth-biggest in America, after falling behind US Bancorp, a Midwestern commercial bank, this week. Bank of America is the largest bank in the United States.

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