Investors may aid Citigroup

Prince Alwaleed bin Talal, the Citigroup Inc. shareholder who came to the bank’s rescue during the credit crisis of the early 1990s, might do so again now, the Wall Street Journal reported on its website Friday, citing people familiar with the matter.

The Saudi Arabian billionaire and the China Development Bank are expected to invest about $2 billion in Citigroup, one person said in the Journal report. However, the newspaper also said there was a chance the deal could fall apart.

Citigroup is in discussions with other shareholders, including U.S. investment funds, about raising their stakes, the Journal said. Citigroup is hoping to disclose the investments Tuesday when it reports fourth-quarter earnings, which may include more than $15 billion in losses from mortgage-related investments, the newspaper said.

Cash-strapped Citigroup, hurt by the mortgage crisis that boiled up last year, already has received $7.5 billion from the Abu Dhabi Investment Authority. On Nov. 26, the investment authority bought a 4.9% stake in Citi, becoming its largest shareholder.

Citigroup spokesman Michael Hanretta declined to comment.

China Development Bank received $20 billion Dec. 31 from China’s sovereign wealth fund, China Investment Corp.

Asian funds have been buying up the pummeled shares of U.S. banks in need of capital. The deals not only dilute the value of the stock, but also worry some investors who are wary about foreign ownership of U.S. companies.

In recent months, China Investment Corp. said it was investing $5 billion in Morgan Stanley and Singapore’s state-run Temasek Holdings invested $4.4 billion in Merrill Lynch & Co.