EXCLUSIVE-Kuwait considering bigger Citi and Merrill stakes

By Rania El Gamal

KUWAIT (Reuters) - State-owned Kuwait Investment Authority (KIA) is looking at more investments in the financial sector and might consider raising its stakes in U.S. banks Citigroup and Merrill Lynch, its managing director said on Wednesday.

"We are in Visa and we are already looking into other opportunities," Bader al-Saad told Reuters when asked whether KIA might be looking for opportunities in the financial industry where asset prices have fallen as a result of the credit crisis.

He said KIA might consider increasing its stake in U.S. banks Merrill Lynch & Co MER.N and Citigroup Inc (C.N) after it already invested $5 billion (2.5 billion pounds) in the two banks' capital raising efforts in January.

"In Citi or Merrill, if there is good opportunity, we will look into it. Do we increase our stake? It all depends on the performance and strategy," said Saad when asked whether KIA might raise its stakes in both troubled U.S. banks.

Asset prices of banks and financial institution have fallen in industrialised economies as they grapple with the fallout of the credit crisis.

Gulf Arab states and companies, buoyed by record oil prices being paid to the world's largest oil-exporting region, spent about $60 billion on foreign assets last year, almost double the previous two years combined.

State-run Abu Dhabi Investment Authority agreed in November to buy $7.5 billion of stock in Citigroup.

Saad confirmed KIA, which manages the Gulf Arab state's vast oil-generated assets, invested about $800 million in the initial public offering of U.S. credit card firm Visa Corp (V.N).