Citigroup Inc., 27% owned by the U.S., is bolstering a unit that trades stocks with the lender's own money after a proposed government ban on proprietary trading helped cause eight of its 22 employees to defect, people with direct knowledge of the matter said.

Kevin Russell, head of Americas stock trading, told employees and securities firms supporting the unit last week that Citigroup may increase the group's trading limits and capital, according to the people. The company will replace some or all of the portfolio managers and analysts who left since their leader, Matt Carpenter, quit in February, according to two of the people, who declined to be identified because the unit's operations are confidential.

Citigroup is trying to preserve the unit, which produces about $100 million of revenue a year. Though Carpenter had begun interviewing with several hedge funds last year, he told Citigroup executives that his decision to leave was partly influenced by President Obama's proposed ban, people briefed on the discussions said.

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