Kuwait's sovereign wealth fund said Sunday it booked a profit of $1.1 billion by selling the stake it took in Citigroup Inc. less than two years ago when the banking giant was strapped for cash.

The Kuwait Investment Authority said in a statement it sold the preferred shares after converting them to common stock for $4.1 billion. That works out to a gain of nearly 37 percent on its $3 billion investment.

Calls to the Kuwait fund for further details went unanswered. A Citi spokesman declined to comment.

Gulf Arab nations' sovereign wealth funds have been heavy investors in U.S. and European companies, using their oil wealth to buy large stakes in companies ranging from Citi to Germany's Volkswagen AG and Mercedes-Benz parent Daimler AG.

The KIA joined other big investors — including the Government of Singapore Investment Corp. and longtime shareholder Prince Alwaleed bin Talal of Saudi Arabia — in pumping some $12.5 billion into New York-based Citi in January 2008. At the time, the bank was reeling from a huge drop in the value of its mortgage holdings.

At the same time it made its Citi investment, the fund took a $2 billion stake in Merrill Lynch, which also needed cash as a result of the credit crisis.

Merrill was later bought by Bank of America Corp., which last week surprised investors by paying back $45 billion in federal bailout money.

Analysts say that move puts pressure on Citi and other banks that tapped U.S. government aid to follow suit, even though they still could face further losses as consumers struggle to pay their bills.

The Kuwait fund's move came as a surprise. In September, it said it had no intention of selling its holdings in either Citi or Bank of America in the short term because its investment policies are based "on a long-term vision."

Kuwait took its stake in Citi last year after another Gulf fund, the Abu Dhabi Investment Authority, paid $7.5 billion for a 4.9 percent stake in the company. ADIA's holdings, known as "equity units," will begin to convert into ordinary shares starting in March next year.

A spokesman for the Abu Dhabi sovereign wealth fund, the world's largest, declined to comment on plans for its Citi stake.

Kuwait's fund is not the first major Gulf investor to cash in on the sharp rebound of Western banks' shares this year.

Abu Dhabi's International Petroleum Investment Co. made a $2.5 billion profit in June by selling part of a stake it held in London-based Barclays. Then last moth, Qatar's sovereign wealth fund, the British bank's top shareholder, unloaded a stake worth about $2.25 billion.

Barclays turned to investors from Abu Dhabi and Qatar last November for a total injection of up to 7.3 billion pounds ($12 billion) to shore up its balance sheet rather than take on the British government as a major shareholder.