Citigroup will need to write down $9bn in second quarter, analyst predicts

Citigroup may suffer second-quarter writedowns of $9bn (£4.5bn), analysts at Goldman Sachs said yesterday.

The analyst William Tanona said the banking giant, hit by more than $46bn of writedowns and credit losses in the past three quarters, may write down $7.1bn of collateralised debt obligations and associated hedges, and $1.2bn for other asset classes in the second quarter. It may also need to write down $600m for structured note liabilities.

The report weighed on Citi’s shares, which fell 6.3 per cent to hit their lowest level in almost 10 years in New York.

“We see multiple headwinds for Citigroup including additional writedowns, higher consumer provisions as a result of rapidly deteriorating consumer credit trends, and the potential for additional capital raises, dividend cuts or asset sales,” Mr Tanona said, adding Citigroup to the Goldman’s “conviction sell” list of stocks.

Mr Tanona reduced his price target for Citigroup sharesto $16 from $20, and expectsthe group to lose 75 cents per share this quarter, compared with an earlier prediction of 25 cents per share profit. For the full year, he anticipates a loss of $1.20 per share. His previous forecast was for a 30 cent per share profit.

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