Wachovia, the fifth largest US bank by market value, is expected to announce as soon as Monday that it will raise several billion dollars in new capital from outside investors to shore up its balance sheet amid mortgage losses, people close to the matter said on Sunday night.

Wachovia is expected to raise about $7bn, similar to the amount raised last week by Washington Mutual, the largest US savings and loan. Warburg Pincus, the private equity group, is expected to be among the investor group buying into Wachovia, the people said.