US regional bank Wachovia is expected to announce a cash injection of up to $7 billion (£3.5 billion) today as two of Wall Street's largest players prepare to announce massive new writedowns in the wake of the credit crunch.

Citigroup and Merrill Lynch are expected to unveil writedowns totalling as much as $17 billion on subprime-related loans and investments for their first quarters.

Wachovia, based in Charlotte, Carolina, shifted its first-quarter results announcement from this coming Friday to today. That prompted speculation that America's fifth-largest bank is putting the finishing touches to a share issue of between $6 billion and $7 billion.

Two years ago, Wachovia paid $24 billion for Californian mortgage bank Golden West which worked in one of the worst-hit housing markets in the US. Wachovia's shares have fallen almost 50% in the last year and it is likely that today's share issue will be at a discount even to the current depressed share price of $27.81.

Later this week, investors will be looking for reassurance from the two major investment banks that, even though they have made further huge write-offs during the last three months, the credit crunch has at least stabilised.

Citigroup is likely to report its second loss-making quarter in a row.

Analysts say its first-quarter writedown may be $10 billion on top of last year's $24 billion of write-downs. That would suggest a net loss of $5.7 billion for the quarter. Citi is likely to cut more than 25,000 of its 370,000 worldwide workforce.

Merrill Lynch's first-quarter writedowns could reach $7 billion, according to analysts, which would be added to last year's $22 billion of subprime losses. This would leave it nursing a first-quarter loss of around $520 million.