China and Prince Alwaleed to invest in Citigroup: report

NEW YORK (Reuters) - Saudi Arabian Prince Alwaleed bin Talal, Citigroup's C.N largest individual shareholder, will inject new cash as the largest U.S. bank grapples with heavy mortgage market losses, the Wall Street Journal reported on its Web site on Friday.

Citigroup shares rose about 2 percent in extended market trading. The stock on Friday closed up 1.6 percent to $28.56 on the New York Stock Exchange trade.

Alwaleed, who has owned his Citi stake since the early 1990s and helped engineer a previous rescue plan for the bank more than a dozen years ago, is likely to keep his total stake in the bank below 5 percent to avoid regulatory scrutiny, the newspaper said.

In addition, the China Development Bank is expected to invest $2 billion in Citigroup, WSJ reported, adding other investors could inject additional capital.

Altogether, the bank is hoping to raise $8 billion to $10 billion from a number of investors, including the Chinese bank and Alwaleed, WSJ said.

Citigroup spokeswoman Shannon Bell declined to comment.

In November, Citi said it agreed to sell up to 4.9 percent of itself for $7.5 billion worth of equity units to The Abu Dhabi Investment Authority only weeks after its former chief executive officer, Charles Prince, left amid news of the heavy losses related to bad bets on mortgage securities and an ailing housing markets.

Reporting by Christian Plumb and Svea Herbst; Editing by Andre Grenon, and Carol Bishopric