Citigroup and Merrill Lynchturned to foreign investors for an unprecedented bail-out yesterday, saying they will raise a total of $21.1bn in fresh capital, mainly from outside the US, to shore up balance sheets devastated by the subprime mortgage crisis.

Citigroup also unnerved investors by warning of losses to come from consumer loans as it revealed a $9.83bn fourth-quarter loss, $18.1bn in subprime credit writedowns, a 40 per cent dividend cut and remaining exposure of $37bn to subprime mortgages.