Citi, Merrill said to seek more overseas cash

Citi trying to line up $10 billion in additional overseas investment; Merrill looks for $3 billion to $4 billion more: Report

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NEW YORK (CNNMoney.com) -- The nation's largest bank and largest Wall Street firm are both trying to raise additional capital from overseas investors to help them deal with losses from subprime mortgages, according to a published report.

The Wall Street Journal reports that Citigroup (C, Fortune 500), the largest bank which sold a 4.9 percent stake in itself for $7.5 billion to the Abu Dhabi Investment Authority in November, is looking to raise up to $10 billion more, with likely all of it coming from investments from foreign government known as "sovereign wealth funds."

In addition the paper reports that Merrill (MER, Fortune 500), the No. 1 brokerage firm which received at least $4.4 billion from Singapore's state-run Temasek Holdings in December, is expected to get an additional $3 billion to $4 billion, much of it from a Middle Eastern government investment fund.

Both firms have announced billions in writedowns of the value of their investments in subprime mortgage - losses which led both firms to replace their chief executives.

Both Citi and Merrill are also due to report financial results next week, with Citi scheduled for a Tuesday release and Merrill on Thursday. Analysts are expecting large losses at both companies.

The Journal reports that during the current credit market crisis, foreign governments have invested about $27 billion in Merrill, Citi, as well as UBS (UBS) and Morgan Stanley (MS, Fortune 500).

The paper said there is concern on Wall Street that a new round of investments could attract unwanted attention from U.S. regulators or members of Congress, which could slow the process for closing the deals.

It could also raise concern among existing shareholders, who are seeing their holdings, which have already been hit by share price declines, further diluted by the new investment.

Citi shares are off 10.5 percent since the Abu Dhabi investment was announced, while Merrill shares have fallen 9 percent in less than a month since the investment from Singapore was announced. To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.