Citi & Merrill in new writedowns crisis

14 April 2008

Further bad debts are to be revealed on the balance sheets of two banking giants - with job losses in the financial services sector looking more and more likely.

Citigroup and Merrill Lynch are to reveal sub-prime-related writedowns exceeding $15 billion, the Times reports.

Citing unnamed analysts, the newspaper claims that Merrill will report $5 billion of bad debts and City $10 billion, potentially rising to $12 billion.

These figures, to be announced in profits declarations later this week, would add to the $150 billion in sub-prime damage already announced by banks since the collapse of the sector last summer.

According to the International Monetary Fund, total writedowns could approach $1 trillion.

Last week, it was reported that Citi plans to sell on around $12 billion of the worst-performing leveraged loans currently on its balance sheet to private equity firms at a loss.

"Job losses are inevitable," the report adds, quoting anonymous insiders.

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