The US government is close to finalising a deal that would give billions in additional aid to Bank of America to help it close its acquisition of Merrill Lynch, according to people familiar with the situation.

Discussions over these funds began in mid-December when Bank of America approached the Treasury Department. The bank, already the recipient of $25bn (€19bn) in committed federal rescue funds, said that it was unlikely to complete its January 1 purchase of the ailing Wall Street securities firm because of Merrill's larger-than-expected losses in the fourth quarter, according to a person familiar with the talks.