Gloomy forecast for Citigroup

by Gill Montia

Story link: Gloomy forecast for Citigroup

Leading Wall Street analyst, Meredith Whitney, is warning that shares in Citigroup, the world’s largest bank, could fall by more than one-third.

Ms Whitney has issued an investor note in which she cuts her 2008 earnings per share estimate from $2.70, to 75 cents.

She has also made it know that these revised estimates could prove optimistic and has warned that the bank shares “could fall below $16 per share or 36% below current levels”.

The analysts is suggesting that the bank needs to raise in excess of $30 billion to restore its capital reserves, and she has downgraded her recommendation on Citigroup’s shares to “market underperform”.

The new estimates have been prompted by the possibility that Citigroup will be making further substantial writedowns on securities related to sub-prime mortgages, consumer loans and some of its corporate lending.

This could force the bank into a sale of assets worth in the region of $100 billion.

In October of last year, a negative report on Citigroup by Ms Whitney caused a stock market decline and she has admitted to having received several death threats as a result.