Citigroup May Cut Dividend by 40%, Goldman Sachs Says

[marmar]

from Bloomberg:



Citigroup May Cut Dividend by 40%, Goldman Sachs Says (Update3)

By Adam Haigh

Dec. 27 (Bloomberg) -- Citigroup Inc., the biggest U.S. bank, may cut its dividend by 40 percent to preserve capital and write down more fixed-income securities than it has told investors to expect, according to Goldman Sachs Group Inc.

The New York-based bank may write off $18.7 billion in collateralized debt obligations such as subprime mortgages, up from its Nov. 4 estimate of as much as $11 billion, Goldman's William F. Tanona wrote in a note dated Dec. 26. Citigroup, which paid out 54 cents each quarter this year, will have to raise $6.2 billion in extra capital to reach its target, they wrote.

``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 the stock. ``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.''

Chief Executive Officer Charles O. ``Chuck'' Prince III stepped down last month and the bank got a $7.5 billion investment from Abu Dhabi's sovereign wealth fund after predicting further losses. Writedowns at the biggest banks are still likely to be ``significantly larger than investors are anticipating,'' Tanona wrote, doubling his estimates for charges at New York-based JPMorgan Chase & Co. and Merrill Lynch & Co.

Citigroup, which has fallen 45 percent this year in New York trading, rose 25 cents to $30.70 before U.S. exchanges opened.

Citigroup tumbled 8.1 percent in New York trading on Nov. 1 after CIBC World Markets analyst Meredith Whitney said it may have to trim its dividend. Deutsche Bank AG analyst Michael Mayo also predicted a dividend cut, saying the investment from Abu Dhabi is ``probably not enough'' to absorb credit losses. .....(more)

THe complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=a6ct_FUaCo5Q&refer=home

[Double T]

1. Yep. Another sign the economy is 'doin' good'.

Chinese are lining up to eventually buy US out.

[Neshanic]

2. Oh a billion here, a billion there, who cares? The economy is great!