Opposition from the Chinese government could scuttle a planned $2 billion investment in struggling megabank Citigroup ( C), The Wall Street Journal reported Monday. Citi is hoping to announce a major cash injection prior to reporting fourth-quarter earnings Tuesday, the Journal reported. The bank and rival Merrill Lynch ( MER), both of which are expected to report massive writedowns this quarter due to poor bets on mortgage-related securities,
have been seeking new sources of foreign capital, according to reports. It is unclear if the deal with China Development Bank is completely dead, the paper said. Citi had been seeking as much as $10 billion from foreign sources in the Middle East and Asia, according to an earlier report. Saudi Prince Alwaleed also reportedly will significantly increase his existing stake in Citi. The bank could also cut its dividend, according to a Journal report last week. The nation's largest bank also is expected to make major job cuts under new CEO Vikram Pandit. Prior to ousting then-CEO Charles Prince, Citi said it expected to write down $11 billion, but Goldman Sachs analyst William Tanona more recently predicted a writedown of nearly $19 billion. Chinese institutions have made two other major recent investments in struggling Wall Street firms. China Investment Corp. is investing $5 billion in Morgan Stanley ( MS) and Citic Securities pumped $1 billion into Bear Stearns ( BSC).