Kuwait says it buys Citicorp, Merrill Lynch stakes

KUWAIT CITY: State-owned Kuwait Investment Authority said on Tuesday it had obtained stakes in US banking giants Citigroup and Merrill Lynch worth $5 billion.

The KIA, quoted by the official KUNA news agency, said it had bought shares worth $3 billion in Citigroup, the second-largest US financial group by market value.

KIA, the oil-rich emirate's investment arm, also obtained a stake worth two billion dollars in Merrill Lynch.

"Being a long-term investor, KIA believes there are investment opportunities available in world markets, especially in the financial sector," the statement said.

In recent weeks, international investors have paid tens of billions of dollars to buy stakes in major US banks reeling from multibillion dollar losses tied to the US housing slump.

US banks have written off billions of dollars of sour mortgage debt and have reported huge losses. Last month, the investment fund of Abu Dhabi, the capital of United Arab Emirates, became one of Citigroup's biggest shareholders through a $7.5 billion investment.

Energy-rich Arab states in the Gulf, which pump some 15 million barrels of oil daily, have been flooded with cash due to soaring oil prices. Most of these countries have sovereign investment funds whose assets are estimated at around $1.5 trillion and have been chasing potential investment opportunities worldwide.

Established in 1982, KIA manages two state reserves whose assets reached 213 billion dollars in March. The assets are invested in the United States, Europe and Asia.