Citigroup is rounding up commercial-paper conduit sponsors to fund up to $10 billion of the credit-card accounts that it maintains for retailers, gas stations and affiliates.

Under the novel funding strategy, Citi plans to funnel the underlying accounts into a new entity called Citibank Omni Trust and then gradually sell interests in the receivables to other banks' conduits. The first such transaction, penciled in for sometime before yearend, could easily top $1 billion.

Citi officials met with conduit operators earlier this week to solicit bids for the planned issue.

J.P. Morgan Chase and Bank of America were among the largest conduit operators to answer Citi's call. Sources speculated that each bank could eventually fund $1 billion to $2 billion of accounts from Citi, if they decide to join the syndicate. Meanwhile, Calyon, Bank of Nova Scotia, Bank of Tokyo-Mitsubishi, Mellon Bank, Societe Generale and WestLB could each fund smaller amounts of Citi's accounts.

Word has it that the conduit operators are willing to fund the accounts at prices that would generate returns of roughly 35 bp over their issuing costs. Most conduit paper is pricing within 1 bp of Libor, including dealer commissions.

Over time, Citi could move $15 billion of accounts into Citibank Omni Trust - two-thirds of which would be funded by conduits. Citi wrote or acquired the underlying accounts through a variety of companies, including Sears, Home Depot and several gas station chains. Accounts from the former Associates would also comprise a chunk of the receivables. "This deal is unusual because it throws everything but the kitchen sink together," a source outside the bank said.

Market players believe that Citi wants to avoid issuing term securities backed by those assets because the large volume of deals could undermine pricing for its routine credit-card securitizations.