NEW YORK — Citigroup said today it is repaying $20 billion in bailout money it received from the Treasury Department, in an effort to reduce government influence over the banking giant. The government will also sell its stake in the company.

The New York-based bank was among the hardest hit by the credit crisis and rising loan defaults and got one of the largest bailouts of any banks during the financial crisis. The government gave it $45 billion in loans and agreed to protect losses on nearly $300 billion in risky investments. Wells Fargo is the last national bank yet to pay back its bailout money.

Citi is selling $20.5 billion in stock and debt to repay the government. It only has to pay back $20 billion because the remaining $25 billion was converted into a 34 percent ownership stake in the bank earlier this year. The government plans to sell that entire stake — which has risen in value by more than 20 percent — during the next year. The loss-sharing agreement will also end as part of the plan.

After repaying the funds, Citi will no longer face heavy scrutiny and restrictions from the government, including caps on executive pay and dividends. However, the repayment comes at a heavy cost. Raising the new capital will significantly dilute current shareholders' stake in the company.

By approving the repayment, the government is essentially saying Citi is on strong enough financial footing to stand on its own. It's a far cry from concerns at the beginning of the year when some analysts were saying Citi could fail completely and be taken over by the government.