Sovereign Funds May Not Save Citigroup

DUBAI — Citigroup shares dropped more than 6 percent Tuesday after the head of Dubai International Capital said that Mideast sovereign wealth funds may fail to save Citigroup unless more cash is pumped into the bank.

Samir al-Ansari, chief executive of the $13 billion government-owned investment firm, said at a private equity conference that it will take more than the combined efforts of the Gulf's wealthiest investors — the Abu Dhabi Investment Authority, the Kuwait Investment Authority and Saudi Prince Alwaleed bin Talal — to save the U.S.-based bank.

Citigroup shares, which have lost about third of their value since November, dropped another 6.4 percent to $21.61 on the New York Stock Exchange. The intervention of Gulf countries awash with cash from record oil earnings has failed to stem the decline seen since last year, triggered by Citigroup's $11 billion subprime write-down last year.

Last year, the Abu Dhabi Investment Authority, a sovereign wealth fund owned by the ruling elite of the United Arab Emirates, the world's fourth-largest oil exporter, pumped $7.6 billion into Citigroup for a 4.9 percent stake. Earlier this year, the Kuwait Investment Authority announced a $3 billion investment in the bank.

But al-Ansari said "it would take a lot more money to rescue Citigroup," Dow Jones Newswires reported on Tuesday. He said more write-downs were expected and Gulf investors would be required to bolster Citigroup.

Dubai International Capital is an investment firm controlled by Dubai's ruler Sheik Mohammed bin Rashid al Maktoum. It already owns stakes in HSBC Holdings PLC and Standard Chartered PLC. Last year, Dubai International Capital also bought a 3.12 percent in European Aeronautic Defence & Space Co. NV, the parent of planemaker Airbus.

In January, Citigroup reported loses of almost $10 billion in the fourth quarter, spurred by $18 billion in write-downs. Citigroup said it planned to raise $14.5 billion in capital by selling stakes to wealthy Gulf investors, including Saudi Prince Alwaleed, the lenders' largest single shareholder.

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