Analysts predict $15bn Citigroup writedown

20 November 2007

Despite the US bank's own lower estimates of the writedowns it will have to make, analyst Goldman Sachs believes that Citigroup may have to write off as much as $15 billion in forthcoming months.

In November, the US's second-largest bank predicted possible investment write-offs of between $8 billion and $11 billion, following the US sub-prime crisis and tighter credit markets, which led to the resignation of chief executive Charles Prince.

However, Goldman Sachs is advising customers to sell Citigroup shares after predicting a $15 billion loss for the banking giant.

"We currently assume Citigroup will take an $11 billion write-off in the fourth quarter of 2007, at the high end of the firm's guidance, and we also assume an additional $4 billion write-off in the first quarter of 2008," its report said.

Citigroup have already announced writedowns to the tune of almost $2 billion.

Following deeper analysis, Goldman Sachs has revised its 2008 earnings forecast for Citigroup from $4.65 to $3.80 per share.

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