The FDIC may sell its Continental Illinois stake.

The Federal Deposit Insurance Corp. said the Chicago bank’s financial condition has improved enough to permit considering the sale of the preferred shares that the FDIC obtained as part of a 1984 government rescue. The FDIC said it has retained the investment banking firm of Morgan Stanley & Co. to advise it on the sale of its holdings in Continental, whose near collapse in 1984 shook the U.S. banking system. As a result of the bail-out, the FDIC controls about 80% of Continental’s stock.