Goldman predicts write-downs for Citigroup

Goldman Sachs Group Inc. of New York predicted yesterday in a research note that Citigroup Inc. might record $8.9 billion in fresh write-downs in the second quarter.

Goldman Sachs Group Inc. of New York predicted yesterday in a research note that Citigroup Inc. might record $8.9 billion in fresh write-downs in the second quarter. It also forecast gloom and doom for the U.S. brokerage industry in general.
The note said that New York-based Citigroup faces “multiple headwinds” in both its retail and investment banking businesses over the next couple of quarters.
Goldman analyst William Tanona estimated that Citi may record $7.1 billion in write-downs from collateralized debt obligations and hedges associated with monolines and another $1.2 billion from other asset classes.
Mr. Tanona also expects Citi to lose 75 cents per share in the second quarter, compared with his earlier forecast of a profit of 25 cents per share.
He projected second-quarter write-downs of $4.2 billion for New York-based Merrill Lynch & Co. Inc. and $1.5 billion for JPMorgan Chase & Co. of New York
Goldman also cut its rating on U.S. brokerages to “neutral” from “attractive,” noting that the pace of deterioration appears to be “far worse than we originally anticipated,” according to the research note.
“The turnaround in business trends that we had been expecting in the second half of 2008 may not occur as quickly as we would have thought,” the note said. “With client activity trends likely to slow down over the next couple of months, we felt a less aggressive stance on the group was warranted.”