TOPWRAP 7-U.S. banks lose billions as state aid pours in

* BofA loses $1.79 bln in Q4, Merrill loses $15.3 bln

* BofA to get fresh $20 bln cash injection

* Citi Q4 loss $8.29 bln, splits in two

* BOJ Governor Shirakawa signals fresh credit market stress

* UK to unveil new credit measures next week - source

* French central bank expects Q4 to have contracted sharply (For more on the global economic crisis, click [nCRISIS])

By Jonathan Stempel and Dan Wilchins

NEW YORK, Jan 16 (Reuters) - Hours after taking $20 billion in new state cash, Bank of America (BAC.N) and recent addition Merrill Lynch revealed they had lost almost as much last quarter, while Citigroup (C.N) also made thumping losses.

Bank of America lost $1.79 billion in the fourth quarter, while Merrill lost $15.3 billion, and Citi revealed a quarterly loss of $8.29 billion, its fifth in a row, and said it would split in two and shed problem assets. [ID:nN16253682][ID:nN16440883]

Late on Thursday the U.S. government had said it would give Bank of America the extra cash to help it absorb Merrill, and the U.S. Senate cleared the release of the remaining $350 billion of emergency funds to tackle the economic crisis.

But as further evidence that economies and credit markets are not responding to massive bailouts and deep interest rate cuts, Bank of Japan Governor Masaaki Shirakawa said financial conditions in the world's second-biggest economy were tightening rapidly. [ID:nT345820]

Conditions in France were also on the slide, as its central bank said it expected the economy to have contracted sharply in the final quarter of 2008, after its business survey showed sentiment soured and economic activity declined. [ID:nLG483601]

British ministers are aiming to announce yet another bank lending package, a Treasury source told Reuters, while Ireland nationalised Anglo Irish Bank ANGL.I, its third-largest lender, to save it from collapse. [ID:nLG524345][ID:nLF117337]

"There's been another wave of the banking crisis," said Bernard McAlinden, strategist at NCB Stockbrokers in Dublin. "There was bad lending. The problem was compounded by the sheer weakness of the economy. So now decent lending has turned bad. It's gone full circle."

As Ireland's Finance Minister Brian Lenihan acknowledged that Ireland's reputation had been damaged by the Anglo Irish Bank rescue, the cost of insuring the country's debt rose sharply on Friday. [ID:nLG548822]