Citigroup and Merrill Lynch today received a combined capital injection of more than $21 billion (£10.6 billion) from foreign investors as Citigroup wrote off $18.1 billion and announced $9.8 billion in sub-prime related losses for the fourth quarter.

Citigroup said today it had raised $14.5 billion worth of capital, including nearly $7 billion from the Singapore Government, as well as investments from the Kuwait Investment Authority (KIA), Saudi Arabia’s Prince Alwaleed and the bank's former chief executive Sanford Weill.

KIA has also emerged as a key investor in a fresh round of funding announced today by Merrill Lynch.

The Wall Street bank confirmed today that it will raise $6.6 billion by issuing preferred shares to investors that also include the Korean Investment Corp and a unit of Mizuho Financial Group, Japan’s second largest bank.

Citigroup announced the deal as it revealed a fourth-quarter net loss of $9.83 billion and $18.1 billion in writedowns connected to sub-prime mortgage assets. The bank also said it will make 4,200 staff redundant.

The US giant is also cutting its dividend from 54 cents to 32 cents a share. It is the first time the bank has cut its dividend since it was formed through the merger of Citicorp and Travelers Group in 1998. The cut will save the bank about $4.4 billion annually.

Citigroup’s new chief executive officer, Vikram Pandit, who replaced Charles Prince last year, said: “Our financial results this quarter are clearly unacceptable.

“Our poor performance was driven primarily by two factors – significant writedowns and losses on our sub-prime direct exposures in fixed-income markets.”

He added: “We are taking several steps to strengthen our capital base, including today's announcement regarding an investment in Citigroup by several long-term sophisticated investors.”

Merrill Lynch is set to announce its fourth-quarter results on Thursday, after taking an $8.4 billion writedown in the third quarter on assets invested in sub-prime mortgage debt.

Like Citigroup, Merrill Lynch replaced its chief executive when John Thain, a Goldman Sachs veteran and former NYSE Euronext chief, took over from Stan O’Neal last year.

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