Major American banks are expected to unveil substantial losses and secure more cash from abroad in what is shaping up to be a pivotal week for the global credit crisis, with central banks also poised to weigh in again.
Citigroup Inc could write off as much as $24 billion and lay off 20,000 workers in a drive to cut costs and boost capital, CNBC said on its Web site in a report on Sunday.

CNBC said the plans will be unveiled on Tuesday when Citi, the largest U.S. bank by assets, reports fourth quarter results.

Investment bank Merrill Lynch is just as troubled. The Financial Times said on Monday that Merrill was seeking about $4 billion in a second capital raising, and Kuwait Investment Authority was expected to be a significant investor. A deal could be announced as soon as midweek, the paper said, citing people familiar with the matter.
The New York Times on Friday reported Merrill was expected to suffer $15 billion in losses stemming from bad mortgage investments, when it releases its results later this week.

The FT also reported that Citigroup was putting the final touches to its second big fund raising, seeking up to $14 billion from Chinese, Kuwaiti and other investors. The $200 billion Kuwait Investment Authority had no immediate comment on Monday on the reports it may buy into the two damaged American banks.

Sell stake to China Bank

But the Wall Street Journal said Citigroup’s plan to sell $2 billion stake to China Development Bank may be in jeopardy due to Chinese government opposition. Banks, wrestling with huge losses stemming from US mortgages lent to people ill-equipped to repay them, have been seeking cash from sovereign wealth funds.

In December, Merrill secured as much as $7.5 billion by selling a stake to Singapore’s government and an asset manager. The month before, Citi agreed to sell up to a 4.9 per cent stake to Abu Dhabi for the same amount.
Other big names such as State Street and JP Morgan report results this week. Furthermore, the Federal Reserve will auction $30 billion later on Monday and the European Central Bank and Swiss National Bank will continue their unprecedented US dollar lending to banks, as part of ongoing coordinated central bank efforts to help calm credit market tensions. The Bank of England will also weigh in.

The Fed is forecast to use its other policy lever — interest rates — before the month is out. It is seen slashing rates by a half-point to 3.75 per cent at its two-day meeting ending on January 30 after Fed Chairman Ben Bernanke said last week the central bank was ready to take “substantive additional action.” The interbank cost of borrowing dollars fell sharply on Monday as financial markets continued to bet heavily on aggressive US rate cuts.