The US government is looking at ways gradually to convert government holdings in banks into ordinary shares as banks accumulate losses, according to the Financial Times.

The aim would be to provide a steady stream of additional equity as needed to cover losses – without the government acquiring a stake in the banks any larger than needed, unnamed sources have said.

US Treasury Secretary Tim Geithner is due to unveil the latest financial sector rescue plan early next week along with moves intended to cut foreclosures and stimulate the housing market.