Citigroup, JPMorgan, Merrill Face More Writedowns, Goldman Says

Discussion in 'Wall St. News' started by ASusilovic, Dec 27, 2007.

  1. Citigroup Inc., JPMorgan Chase & Co. and Merrill Lynch & Co. may write down an additional $34 billion in securities linked to the collapse of the subprime mortgage market, according to Goldman Sachs Group Inc.

    Citigroup, the biggest U.S. bank, may reduce the value of its holdings by $18.7 billion in the fourth quarter and cut its dividend 40 percent, Goldman analyst William Tanona said in a Dec. 26 report on the New York-based companies. JPMorgan Chase & Co., the third-largest U.S. bank, may write off $3.4 billion, double Goldman's previous estimate. Merrill Lynch & Co. may reduce its holdings by $11.5 billion, he wrote.

    Losses and writedowns at the world's biggest banks and securities firms total $97 billion this year, according to data compiled by Bloomberg. The market for collateralized debt obligations, loans packaged into new securities, has dried up after surging subprime mortgage defaults led to rating downgrades and convinced many investors to buy only the safest debt.

    ``It will be a couple of quarters before the current credit crisis is fully digested by the markets,'' wrote Tanona, who has a ``sell'' rating on Citigroup's stock and a ``neutral'' rating on JPMorgan and Merrill. ``Given the magnitude of the writedowns we assume and Citi's remaining exposure, we believe the firm has a serious need to preserve or raise additional capital.''

    Tanona downgraded Citigroup's shares on Nov. 19 and was the last of six analysts who follow the company to advise clients to sell the stock. Nine analysts rate Citigroup a ``buy'' while eight recommend holding the stock, according to Bloomberg data.

    Constant dripping wears away the stone...
  2. I'm still a bit confused with this whole subprime mess are these companies just writing off SIV's, MBS, and CDO's because they still have no idea how to price these instruments or is it now because everyone is defaulting on the credit loans??? I mean if they just dont know how to value what these structured credit loans are worth why not sell them cheap or just hold on to them instead of just writing them off??
  3. Is it sandstone or granite? When those 17 non-bearish analysts give a sell-recommendation, you'll know what action to take.
  4. ..then why is Goldman Sachs buying Citigroup Stock?:D