The Kuwait Investment Authority (KIA) is set to invest a total of $7 billion in Merrill Lynch and Citigroup to assist with plugging holes in their balance sheets.
Kuwait's cash injection is part of a total investment of $19 billion being sought by the banks as they seek to recover from losses caused by the US sub-prime mortgage market, according to reports.
Some $4 billion of the investment is earmarked for Merrill Lynch, which is this week expected to reveal writedowns of between $10 billion and $20 billion.
Meanwhile, $3 billion is for Citigroup, which is thought to be about to reveal losses of around $20 billion.
Citigroup secured a cash injection of $7.5 billion from the Abu Dhabi Investment Authority in return for a 4.9 per cent in November last year.
Merrill Lynch has also put deals in place with Singapore state-owned fund Temasek and Davis Selected Advisors for $5.2 billion and $1.2 billion respectively.
