Maybe the moderators would consider pinning this. I would like to see if we can consolidate the reports of write-downs of the banks over the last couple of months. Heck, we could even put out an over/under!! Anyway, here's Citi bank, : http://www.reuters.com/article/businessNews/idUSN1945544220071119?feedType=RSS&feedName=businessNews What I particularly love about this one is that it is Goldman that is downgrading. Anybody have any interesting MS Fraud stories about these guys? For those of you counting, thats $15 Billion over the next six months. Anybody want to bet it increases? JB Citigroup faces $15 bln writeoff, cut to "sell": GS
By Jonathan Stempel
NEW YORK (Reuters) - Goldman Sachs & Co on Monday downgraded Citigroup Inc (C.N:
Quote, Profile, Research) to "sell" from "neutral," and said the largest U.S. bank may have to write off $15 billion over the next two quarters as mortgage losses reduce earnings.
The downgrade sent Citigroup's shares down as much as 5.4 percent, leading a broad decline in financial services stocks.
Monday's report from analyst William Tanona came shortly after Citigroup's own chief U.S. equity strategist, Tobias Levkovich, upgraded the nation's banking sector to "overweight" from "market weight," calling selling pressure "overdone."
Goldman's forecast compares with the $8 billion to $11 billion that Citigroup on November 4 said it may write off this quarter for exposure to subprime mortgages and collateralized debt obligations. Charles Prince, Citigroup's chief executive, resigned the same day.
"With deteriorating consumer and housing metrics, Citigroup is facing mounting pressure across many businesses," Tanona wrote. "The lack of leadership at this point in Citigroup's storied history could not have come at a worse time."
Tanona also cut Citigroup's price target to $33 from $48, and his profit-per-share forecast to $3.80 from $4.65 for 2008, and to $4.60 from $5.20 in 2009.
He said the bank may need to cut its 54-cents-per-share quarterly dividend or find new capital to shore up capital levels.
The analyst also lowered his price targets for six other banks and brokerages: Bear Stearns Cos (BSC.N:
Quote, Profile, Research), E*Trade Financial Corp (ETFC.O: Quote, Profile, Research), JPMorgan Chase & Co (JPM.N: Quote, Profile, Research), Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research), Merrill Lynch & Co (MER.N: Quote, Profile, Research) and Morgan Stanley (MS.N: Quote, Profile, Research).
Citigroup shares were down $1.61, or 4.7 percent, to $32.39 in late morning trading on the New York Stock Exchange, after earlier falling to $32.15. The 24-member Philadelphia KBW Bank Index (.BKX:
Quote, Profile, Research) was down 3 percent. Citigroup shares touched $31.06 on November 8, their lowest since March 2003.
Banks have announced more than $50 billion of write-downs tied to the U.S. housing slump, as defaults soared and the value of mortgages that investors deemed too risky plummeted.
The projected $8 billion to $11 billion write-down is on top of a top of a $1.83 billion mortgage-related loss that Citigroup took in the third quarter. The New York-based bank on November 4 said it had no plans to cut its dividend.
Citigroup also provided $7.6 billion of financing as of October 31 to so-called structured investment vehicles after they were unable to pay down maturing short-term debt, according to a November 5 regulatory filing.
Among 19 analysts who cover Citigroup, eight rate it "buy" or the equivalent, eight rate it "hold" and three rate it "sell," according to Reuters Estimates.
Goldman expects Citigroup will need write-downs of $11 billion this quarter and $4 billion in the first quarter of 2008. A $15 billion loss would, after taxes, wipe out close to six months of profit.
"(The) risk taking culture may be irreparably damaged," Tanona wrote.
In contrast, Citigroup strategist Levkovich on November 16 upgraded the banking sector, citing its "compelling valuations and beaten down earnings estimate revisions, not to mention repulsive sentiment around these stocks, a contrarian signal."
Levkovich also wrote that worries about subprime exposures have created a "pile-on effect that seems to be overdone." He admitted his upgrade may seem "fairly controversial."
(Reporting by Jonathan Stempel; Editing by Dave Zimmerman and Tim Dobbyn)