Prince Alwaleed bin Talal gave Citigroup his vote of confidence today as the Saudi Arabian billionaire announced plans to boost his stake in the group to 5 per cent – a day after its shares lost nearly a quarter of their value.

Prince Alwaleed, whose share of Citigroup declined to less than 4 per cent in the past year as the American bank has raised about $50 billion (£33.6 billion) of capital from sovereign wealth funds and $25 billion from the US Government said he "strongly believes" that the stock is "dramatically undervalued", after a decline of nearly four fifths this year.

The prince said that the cash infusions, combined with the announcement of a further 52,000 job losses on Monday, will help to make Citigroup "a long-term winner in the financial services industry."

In a statement, he expressed his "full support" to Citigroup’s management, including its chief executive, Vikram Pandit, and said the bank was "taking all the necessary steps to position the company to withstand the challenges facing the banking industry and the global economy."

Yesterday, Citigroup said it would buy the last $17.4 billion in assets held by its structured investment vehicles — independent debt-financed entities that the bank runs and for which it is ultimately responsible.

It said it would take a $1.1 billion writedown on their eroded values. This hit investors' already fragile confidence and sent Citigroup’s shares down by 23 per cent.

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