The US Department of Justice (DoJ) is considering suing Citi and Bank of America (BofA), after talks aimed at settling investigations into the banks’ sales of mortgage-backed bonds broke down.

Sources familiar with the development were quoted by The Wall Street Journal as saying that Citigroup is ready to pay nearly $4bn, whereas regulators have demanded approximately $10bn to settle the investigations.

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People close to the discussions said that Citi has objected the DoJ’s demand of $10bn by arguing that it was a relatively smaller player in the mortgage-securities market. However, the DoJ officials were not satisfied with the offers made by the bank.

A civil lawsuit against Citi is expected to be filed in the court, as early as this week.

While BofA is reportedly ready to pay almost $12bn, much less than the demand of $17bn by the regulators, the DoJ is pressurizing to increase the settlement by billions of dollars.

Both Citi and the DoJ have been engaged in discussions to settle the probes since April, the sources told the news agency.

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Citi sold approximately $91bn of mortgage loans packaged into private-label mortgage debt to the investors between 2004 and 2008, not guaranteed or issued by government agencies, which buster later. In contrast, Bank of America and its subsidiaries sold $965bn and J.P. Morgan and its subsidiaries sold $450bn.

On the other hand, BofA’s Merrill Lynch unit is believed to have issued about $965bn, whereas JP Morgan issued $450bn worth of faulty mortgage based securities between 2004 and 2008.

Earlier in November 2013, the DoJ reached a $13bn settlement with JPMorgan Chase to resolve similar federal and state investigations.