State-owned Kuwait Investment Authority said it would invest $3 billion in Citigroup Inc and $2 billion in Merrill Lynch & Co, both hit by writedowns linked to the US subprime mortgage crisis.

"As a long-term investor, the KIA believes that the markets currently provide attractive investment opportunities in the financial sector," it said in a statement on Tuesday.

Citigroup, which suffered its first quarterly loss since its creation in 1998, said on Tuesday it was looking to raise $12.5 billion in convertible preferred securities. Merrill Lynch said it was looking to raise $6.6 billion.  -Reuters