China may block $2B Citi deal - report

Chinese government may halt China bank's investment in Citigroup, according to The Wall Street Journal.

HONG KONG (AP) -- Opposition from the Chinese government may stop Citigroup Inc.'s plan to raise capital by selling a stake worth $2 billion to a Chinese bank, The Wall Street Journal reported on its Web site Monday.
Cash-strapped Citigroup (C, Fortune 500), hurt by the mortgage crisis that boiled up last year, has been seeking foreign investors, including China Development Bank, to boost its balance sheet in the face of mounting write-offs.
The Journal reported that opposition from the Chinese government seems to have surfaced over the weekend, citing an unnamed person familiar with the situation. It is not clear whether the deal has been abandoned, the newspaper said.
Yang Hua, director of China Development Bank's news department, said she was not aware of any plans for China Development Bank to invest in Citigroup or any government opposition to such investment, according to the paper.
Foreign investors ride in to rescue Citi
A telephone call by The Associated Press to the bank rang unanswered after business hours, and in New York, Citigroup spokeswoman Shannon Bell declined to comment.
The U.S. financial group is hoping to announce a capital injection from investors when it releases its fourth-quarter earnings Tuesday, the Journal said.
The cash-strapped Citigroup has already gotten $7.5 billion from the Abu Dhabi Investment Authority. On Nov. 26, the ADIA bought a 4.9 percent stake in Citi, becoming its largest shareholder.
The possible failure of the plans of China Development Bank to invest in Citigroup comes after a series of Chinese institutions have put money into struggling Wall Street firms. Most recently, China Investment Corp., the country's sovereign wealth fund, agreed to invest $5 billion in Morgan Stanley.
China Development Bank, which was established in 1994 and is now preparing to become a commercial lender, got a $20 billion injection Dec. 31 from China Investment Corp.