NEW YORK (Reuters) — Citigroup Inc's largest individual investor gave the troubled bank new support, saying he would boost his stake modestly, but failed to revive investor confidence as the bank's shares tumbled another 25 percent.

Saudi Prince Alwaleed bin Talal, who plans to increase his stake to five percent from less than four percent, said the bank's shares were "dramatically undervalued" following a nearly 90 percent plunge since late 2006.

He also expressed "full and complete support to Citi management," including embattled chief executive Vikram Pandit, who earlier this week announced a plan to cut 52,000 jobs.

But investors were unimpressed, and many questioned the bank's ability to withstand what are expected to be billions in additional loan losses in 2009.

Citigroup, which has lost more than half of its value this month alone, was the top decliner among large US banks, but the carnage was widespread. JPMorgan Chase & Co was down 13 percent and Bank of America Corp was off seven percent.

And in a year that has seen the rescue of giant insurer American International Group Inc and mortgage giants Freddie Mac and Fannie Mae, some speculated about the possibility of government intervention.

"As a company, (Citigroup) can't go bankrupt because they're too big," said Saj Karim, investment adviser at Cannacord Capital in Waterloo, Ontario. "They will get bailed out, and that's another unfortunate strain on the US government."

Citigroup shares fell as low as $4.77, a nearly 14-year low, in morning trade on the New York Stock Exchange.

The cost of insuring Citigroup's debt jumped. Five-year credit default swaps rose to 395 basis points, meaning it would cost $395,000 a year to protect $10 million of debt, according to data from Phoenix Partners Group. The swaps closed at 357 basis points on Wednesday, or $357,000 a year to protect $10 million of debt, according to Markit.

"Spreads are widening on pretty much everything," said Keith Davis, a bank analyst at Farr, Miller & Washington. "Given that backdrop, how much capital is Citi going to need to shore up their balance sheet? I don't think anyone knows, and so the knee-jerk reaction is to sell first and ask questions later."

Citigroup's market value was $34.9 billion on Wednesday, meaning that Alwaleed plans to invest at least $349 million, based on Wednesday's closing price.

Peter Kenny, managing director at Knight Equity Markets, said that if Alwaleed "is upping his stake to five percent at the current valuation of the company, what does that mean? That he's spending less than $100 million? That's not very much."

He added: "The fact he's bumping up to five percent actually underscores how pathetic the stock performance has been."

Alwaleed said the New York-based bank is "taking all the necessary steps to position the company to withstand the challenges facing the banking industry and the global economy."

Alwaleed, a nephew of Saudi King Abdullah, added that he is "fully confident that Citigroup's universal banking model and global franchise will make it a long-term winner in the financial services industry".

The prince's percentage stake in the bank was reduced in late 2007 and early 2008 as Citigroup raised some $50 billion of capital from sovereign wealth funds and other investors, including Alwaleed, to shore up its balance sheet. It recently received another $25 billion under the US government's bank bailout package.

The Saudi billionaire last came to the bank's aid in 1991, when he invested $590 million in Citigroup predecessor Citicorp, which needed cash as it struggled with Latin American loan losses and a collapse in US real estate prices.