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The Treasury will own 92.1 percent of the bailed-out insurer after a recapitalization deal closes. AIG said on Wednesday afternoon the deal will close Friday, and will lead to a $3.6 billion charge in the current quarter. It had been expected to take large charges related to the closing.

With that deal closed, sources have said a large secondary share offering -- $10 billion or more -- is expected sometime in the second half of May.

AIG Chief Executive Bob Benmosche described a "sense of joy" in closing the recapitalization, and said the next step for the company was to prepare for the share sale.

"We have to think about the need to do a capital raise and improve liquidity," he said in an interview, though he declined to comment on timing, saying only "we want to be ready as soon as possible."

The company and the government are expected to treat the sale much like an initial public offering, given its size and its significance as the effective return of AIG to widely held public ownership.

AIG is hoping to attract significant ownership from institutional investors, drawing in people who fled the stock after its September 2008 near-collapse, sources have said.

Both the Treasury and AIG will sell shares in the May offering; a person familiar with the situation said AIG aims to sell $3 billion in stock at that time.

Two of the people familiar with the bank meeting said the firms are likely to come in pitching for a fee of 75 basis points or less, in line with the fees on the IPO of General Motors Co last year.

Such a structure would be much less than usual for either an IPO or a secondary share offering of that size.

The location of the meeting is not clear, though it is expected to draw the top executives from the participating banks. A source familiar with the situation said Bank of America Chief Executive Brian Moynihan would be among those attending.

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AIG shares, trading above $58, are expected to fall back to the mid-$40 range next week when stock warrants begin trading, a source said Monday.

Even at that range, though, the government would be looking at a paper profit in the neighborhood of $27 billion.

That would mark a surprise ending to more than two years of tortured back-and-forth on the future of AIG. At one point the government bailout topped $182 billion, and the company was headed for a fire-sale breakup.

In a report detailing its outlook for 2011, the multilateral lender forecast the global economy would expand 3.3 percent this year, softer than the 3.9 percent expansion seen during 2010.

Growth in the developing world will sharply outstrip growth in mature economies. The World Bank forecast growth in emerging economies of 6 percent in 2011, weaker than last year's 7 percent rate. Rich countries, in contrast, will grow only 2.4 percent, down from 2.8 percent for 2010.

"The recovery in many high-income countries has not been strong enough to make major inroads into high unemployment in spare capacity," the report said.

The United States, the world's largest economy, is a case in point. The economy exited its worst recession in generations in the summer of 2009. But at 2.6 percent on latest count, growth has been too soft to put a meaningful dent in a stubbornly high jobless rate -- now at 9.4 percent.

The World Bank predicts the U.S. economy will grow 2.8 percent in 2011, largely in line with a median forecast of 2.7 percent in a Reuters poll of private sector economists.

In Europe, recovery has been hampered by persistent worries about highly-indebted countries like Greece and Portugal, which have kept borrowing costs high and led to severe market disruptions.

Euro zone growth is expected to slow to 1.4 percent this year from 1.7 percent in 2010, the World Bank said. Indeed, the report cited the continent's ongoing debt debacle as a key risk to the global recovery.

Given a backdrop of uncertainty, monetary authorities on both sides of the Atlantic have adopted a policy of extremely low interest rates, which the World Bank blamed for rising currency exchange rates in parts of the developing world.

"Capital inflows into some middle-income countries have placed undue and potentially damaging upward pressure on currencies," the World Bank said.

The U.S. Federal Reserve, in particular, has come under intense criticism from officials in emerging economies for its policy of purchasing government bonds to keep long-term rates down.

The U.S. central bank argues it must focus on the domestic economy, saying other countries have their own ways of dealing with rising capital inflows.

A range of countries have adopted measures such as tariffs and capital controls in order to stem the influx, which some fear could reverse quickly if conditions shift.

(Reporting by Pedro Nicolaci da Costa; Editing by Leslie Adler)

The Fed's Beige Book report, based on anecdotal reports collected from the business contacts of the central bank's regional branches, painted an increasingly bright, if cautious, picture.

While real estate markets, at the heart of the deepest recession in generations, remained predictably weak, manufacturing contacts sounded more upbeat.

The Fed reported better conditions across all 12 of its districts, though banking and financial services showed results that varied by region.

"Economic activity continued to expand moderately from November through December," the central bank said in a statement.

The findings were consistent with a recent pick-up in U.S. economic data that has prompted some economists to beef up their forecasts for growth in the first half of 2011.

The U.S. economy grew 2.6 percent in the third quarter, a level considered too meek to put a significant dent in the nation's 9.4 percent jobless rate.

Against that backdrop, the Fed announced in November it would buy an additional $600 billion in bonds over an eight month period in order to support the recovery by keeping long-term borrowing costs low.

Market interest rates have risen sharply since then despite the purchases, though policymakers have argued they might have risen even further without Fed action.

The improvement in conditions in the Beige Book report strengthens the case, made both by some top Fed officials and outside economists, that the latest round of bond-buying might not be necessary.

Fed Chairman Ben Bernanke, however, has argued that the economy is running so far beneath its full potential that it continues to need help from the monetary authorities.

The central bank has cited both weak employment conditions and very low inflation readings to justify its actions.

Import prices rose 1.1 percent, just beneath economists' forecasts in a Reuters poll, following a revised 1.5 percent increase in November. Prices were up 4.8 percent for 2010 as a whole, according to the Labor Department data released on Wednesday.

Petroleum import prices climbed 3.9 percent, while non-petroleum costs rose just 0.4 percent.

Export prices advanced 0.7 percent after a 1.5 percent gain in November. They were up 6.5 percent in 2010, the highest in records dating back to 1983, and nearly double the rise seen in 2009.

A low inflation environment in the United States has allowed the Federal Reserve to maintain a very loose monetary policy, but a recent spike in global energy and commodity prices has raised some concern that cost pressures might pick up.

One big reason for tame price growth has been the weakness in the housing market, which some economists worry will take an extended period to recover.

The latest data offered some modest encouragement, with applications for U.S. home mortgages rising as lending rates eased from recent highs.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 2.2 percent in the week ended January 7 to its highest level in about a month.

It had dropped on a lull in refinancing activity as influential U.S. Treasury yields soared in late 2010. Fixed 30-year mortgage rates averaged 4.78 percent in the week, down from 4.82 percent the prior week and 4.93 percent before the Christmas holiday.

The MBA's seasonally adjusted index of refinancing applications climbed 4.9 percent last week. However, even with lower rates, its gauge of loan requests for home purchases dropped 3.7 percent.

(Reporting by Pedro Nicolaci da Costa; Additional reporting by Al Yoon in New York; Editing by Andrea Ricci)