Bernanke says no plans to nationalize Citigroup

WASHINGTON Feb 25 (Reuters) - Federal Reserve Chairman Ben Bernanke said on Wednesday there was no plan to nationalize troubled U.S. bank Citigroup (C.N), causing stocks on Wall Street to trim losses.

"Nationalization to my mind is when the government seizes the bank, zeros out the shareholders and begins to manage and run the bank, and we don't plan anything like that," Bernanke said during his semi-annual testimony to Congress.

"It may be the case that the government will have a substantial minority share in Citi or other banks, but again we have the tools ... make sure that we get the good results we want .. without all the negative impact of going through a bankruptcy process of some kind of or seizure."

Speculation that the government would be forced to nationalize some troubled financial institutions, including Citigroup and Bank of America (BAC.N), has weighed heavily on U.S. stocks in recent days. Stocks on Wednesday pared some loses on Bernanke's comments.

"This debate over nationalization kind of misses the point," said Bernanke, adding that there were two parts to the government's rescue plan for the financial sectors.

These included ensuring stability and ability to lend, and using supervisory powers to make sure banks did not misuse the capital they received from the government and did not continue taking excessive risks, he said. (Reporting by Lucia Mutikani; Editing by Jonathan Oatis)