The fallout from America’s mortgage meltdown continued at Citigroup yesterday amid reports that the world’s biggest bank was poised to cut up to 24,000 jobs, that it planned a substantial dividend cut and that the Chinese Government had pulled out of a deal to inject about $2 billion (£1 billion).

The job losses, up to 8 per cent of Citigroup’s 300,000 staff, were reported by CNBC, the American television news network.

Citigroup is expected to announce a hefty dividend cut for the fourth quarter, perhaps by as much as half, which would save about $5 billion if maintained over a year.

Meanwhile, it became apparent that the state-owned China Development Bank had rejected an opportunity to invest after several weeks of discussions.

However, the bank is expected to say that it has agreed a multibillion-dollar injection from a consortium of Asian and Middle Eastern investors. Its balance sheet has been badly damaged by billions of dollars of losses on investments in sub-prime mortgages and it is expected to announce further sub-prime losses today, with some reports suggesting as much as $24 billion for the fourth quarter.

Citigroup last night said it had created a new position, head of talent management, which will largely be devoted to keeping senior management. Paul McKinnon, a former senior vice-president of human resources at Dell, will take up the role on February 1.

The reports of Citigroup’s woes emerged hours after an investigation at Merrill Lynch came to light. The US Securities and Exchange Commission (SEC) is investigating whether the bank used information about some share trades that the brokerage had conducted for clients to make a profit on its own account, a practice known as “front-running”.

The inquiry relates to certain Merrill Lynch trades from 2002 to 2006. One transaction is understood to involve an order from Fidelity Investments, the mutual-fund operator. The SEC declined to comment.

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