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Wall Street prepares for further write-downs

14/04/2008

Several Wall Street banks are expected to post further write-downs related to the credit crisis this week as first-quarter results are released.

Citigroup is set to admit a further $11 billion (£5.6 billion) write-down when the bank posts its first-quarter figures on Friday, the Sunday Times reported.

The newspaper quoted Oppenheimer analyst Meredith Whitney, who said she expected Citigroup to record further write-downs, in addition to $18 billion (£9.12 billion) the bank wrote off in the third and fourth quarters.

If Ms Whitney is right – and she was the first to forecast correctly that Citigroup would need to cut its dividend to prop up its finances - Citigroup would record an overall group loss of nearly $7 billion (£3.54 billion) in the first quarter.

Citigroup will not be alone in reporting ongoing losses related to the credit crunch. The Times also said Merrill Lynch is predicted to take a $4.5 billion (£2.28 billion) write-down for the first quarter.

Merrill Lynch, which has reported $24 billion (£12.16 billion) of write-downs so far, reports its first-quarter results on Thursday.

Meanwhile, JP Morgan Chase is expected to report a small profit on Wednesday, although it will still most likely post write-downs of $2.8 billion (£1.42 billion).

The International Monetary Fund has already said the credit crisis has cost $1 trillion (£503 billion) and Federal Reserve boss Ben Bernanke has warned there is more to come.