Shares in Citigroup fell 6% Monday, after Goldman analyst William Tanona came out and recommended that clients sell Citigroup shares as he expected that the firm would need to take a total write down in CDOs of around $15bn in the third and fourth quarters. The firm has already indicated that it will take a loss of between $8bn - $11bn on these positions, and Tanona estimates that that the loss will end up significantly higher.
Tanona ruled out a 'quick fix' for Citi shares, and said that 'the lack of leadership at this point in Citi's storied history could not have come at a worse time. With deteriorating consumer and housing metrics, Citigroup is facing mounting pressure across many businesses'. Goldman has lowered its rating on Citi to 'sell', and the firm's shares fell back a further 6% Monday, closing at $32. They have now fallen around 40% this year. And Bloomberg reports that Deutsche Bank recently lowered its Citi share price estimate to $29 from $34.
Reuters reports that shares in UBS were weaker Tuesday, after CreditSights Inc. came out and said that it expected the firm to take 'substantial' losses from the $20bn of CDOs with the highest ratings that it currently holds. The New York-based research firm says that in excess of $9bn of the super senior portions of CDOs owned by UBS is at risk of being marked down. Although CreditSights doesn't expect the firm to have to write-down the full $9bn, it does 'not see how it can avoid further substantial losses'.
The Wall Street Journal reports that Sumitomo Mitsui Financial Group has seen second-quarter profits fall 59% to $460m, and says that it expects to sustain $784m in subprime-lending related losses in its current fiscal year. And insurer Swiss Re has come out and said that it has written down the value of its subprime securities by some 62%, resulting in mark-to-market losses to date of some $1.07bn.
Finally, Deutsche CEO Josef Ackermann has said that he feels that the markets have got nervous again and has called for more transparency from banks about their subprime losses. (God help us - more transparancy and more write-downs! It's the end of the world!!)