US banks eye Gulf for more bailouts

Kuwait City, New York: The sovereign funds of Kuwait and other Gulf states were in the spotlight on Monday as Citigroup sought extra emergency funding and its fellow US bank Merrill Lynch was said to want more cash too.

The moves came as one newspaper report raised questions over whether previously agreed Chinese funding for Citigroup may fall through.

Citigroup, the largest US bank by assets, is looking for more funds to help it through losses from the subprime crisis after securing $7.5 billion from the Abu Dhabi Investment Authority in November, a source familiar with the situation told Reuters in New York.

Merrill is seeking about $4 billion from the Kuwait Investment Authority and others as it faces as much as $15 billion in credit market losses, the Financial Times newspaper reported.

In December, Merrill shored up its capital base by as much as $7.5 billion after selling a stake to Singapore state fund Temasek and asset manager Davis Selected Advisers.

Citi, which said it could write down about $11 billion of repackaged debt, was seeking as much as $14 billion from investors including its largest individual shareholder Saudi Prince Al Waleed bin Talal, the KIA and China Development Bank, newspapers reported.

In a separate development yesterday, the Wall Street Journal reported that Citi's plan to sell a $2 billion stake to state-owned China Development Bank may be in jeopardy because of Chinese government opposition.

Gulf investors flush with cash from oil prices near $100 a barrel, have said they are looking to invest in the US to take advantage of cheaper asset prices as the dust settles on a crisis triggered by mortgage defaults.