Even as recently as November any suggestion of a second round of bailouts for some of the biggest names in world banking would have been laughable, and if anyone had predicted that the once mighty Citigroup or Merrill Lynch would be going around the world cap in hand, trying to raise billions in new capital, they would have been laughed at.

Likewise if anyone had suggested that at the end of this laughable process the likes of Citi and Merrills would be all but controlled (in terms of holdings) by investors outside the US, it would have been treated as being just as fantastical. And if you’d predicted that up to a quarter of Citi’s capital could be controlled by a handful of investors, with other holders watered down, it would have been loony bin time.

And yet that’s exactly what will happen by the end of this week.

Starting tonight the second round of recapitalising Wall Street will be revealed; the price tag will double the new capital being sought to over $US50 billion, and the red ink on bank accounts could equal that figure.

Wall Street analysts believe US banks and others with continuing exposure to the subprime black hole (which includes all those collaterallised debt obligations which continue to implode as house prices fall) could reveal write-offs and losses approaching $US40 billion this week and next.

Having already pumped upwards of $US27 billion in new capital into Citigroup, UBS, Bear Stearns and Merrill Lynch, big foreign funds and smaller US investors are being pressured to open their wallets again for a second round of funding.

Reports overnight said that Merrill Lynch is looking at billions of dollars more in new capital, with The Kuwait Investment Authority expected to be a significant investor in the new deal with a $US4 billion contribution, which could be announced to coincide with the latest profit, sorry, results announcement.

Other investors could come from Europe as Merrill’s looks to top up the earlier $US6.4billion injection from Singapore and a group of US investors. Merrill’s reports on Thursday when it could reveal losses and write-downs of $US15 billion to $US20 billion according to some media and analyst estimates on Wall Street.

Tonight Citigroup is tipped to announce a write-down of close to $16US billion and will present plans to raise as much as $US14 billion new capital from the Chinese and public market investors as well as the KIA. The dividend is expected to be cut by as much as 40% to preserve capital.

With the $US7.5billion Citigroup raised in late November, the new funding, if achieved, would see the fantastic sum of more than $21 billion in new capital raised by America’s biggest bank by assets. Upwards of 20%-25% of the bank could be owned by a group of big investors, and the remaining shareholders diluted, by the end of this round of fund raising.

Abu Dhabi and an existing Saudi investor already control around 10% of Citi. Such a level of control would have been unthinkable six months or so ago. Now it’s a sign of the parlous financial state this financial giant now finds itself in.

Besides Merrills and Citigroup, Washington Mutual reports this week and is expected to produce a loss. JPMorgan Chase and Wells Fargo, a big Californian bank with a strong mortgage book, are expected to report a drop in quarterly earnings but are expected to remain in the black.