Citi and Merrill in line for injections of overseas cash

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Citigroup and Merrill Lynch are finalising details of the deals ahead of publishing what are likely to be dire fourth-quarter and full-year results next week.

Citigroup could reveal subprime write-downs of up to $18 billion (£9.1 billion) while Merrill could show credit-crunch damage of up to $11.5 billion. Both banks have ousted senior management and are being run by new chief executives.

Merrill is reported by the Wall Street Journal to be in final talks to get between $3 billion and $4 billion from a Middle Eastern government investment fund. Citigroup could get as much as $10 billion from a variety of sovereign wealth funds.

Late last year, Citigroup received a $7.5 billion cash injection from Abu Dhabi, which gave it a 4.9% stake in the bank.

Citigroup's board is scheduled to meet on Monday to approve the new injection of capital ahead of its results on Tuesday. It could also announce massive lay-offs. There are growing concerns the board will approve slashing the final dividend. If it is halved, the bank could save $2.5 billion a year.

Citigroup had said the dividend was safe, but that was before Vikram Pandit took over from Charles Prince as chief executive, and he is seen as more willing than Prince was to take radical action.

Merrill's new boss, John Thain, who replaced Stan O'Neal, is also expected to reveal a shake-up of senior management. He will also announce that Merrill's planned new hi-tech headquarters in New York has been put on hold.