Citigroup, Merrill See Expected Write-Down Numbers Skyrocket

Trying to keep up with analysts as they handicap the fourth quarter write-downs we almost all know are coming from both Citigroup and Merrill Lynch is turning out to be an amusing pasttime. The numbers are getting pretty heady as we head into the weekend, with each estimate outdoing the previous.

For Merrill, Bloomberg reports:

Analysts’ estimates of Merrill’s writedown range from $8.3 billion, by Bank of America Corp.’s Michael Hecht, to $12 billion, by Prashant Bhatia at Citigroup Inc.

Sorry guys, but the New York Times decided to trump you by throwing out $15 billion earlier on Friday morning. Do I hear a $16 billion? Anyone?

Regardless, we’re talking about billions of dollars here. And the write-down — whatever it ends up being — will most likely push Merrill Lynch’s shareholder’s equity below that of rival Goldman Sachs, Bloomberg reported.

Citigroup speculation
Estimating the fourth-quarter write-downs being faced by Citigroup, Bloomberg covers a different set of analysts (although you have to admit, it’d be damn interesting to see Citigroup’s own Bhatia throw up a number here):

JPMorgan analysts including Vivek Juneja estimated today that New York-based Citigroup may write down $14 billion in the value of its assets, including collateralized debt obligations, leveraged loans and commercial mortgage-backed securities.

Bear Stearns analyst David Hilder increased his estimate by 31 percent to $16 billion, saying the Journal report yesterday suggests a larger-than-estimated loan loss provision in the fourth quarter.

Not to be outdone by either, Calculated Risk reports that CNBC’s Charlie Gasparino on late Friday had pegged the number at an astounding $24 billion, citing “insider sources.”

Nonetheless, Citigroup gained on the NYSE today after speculation that Saudi Prince Alwaleed bin Talal, who owned 4 percent of the company as of June, may raise his investment. There’s apparently no drug as intoxicating to Wall Street traders as foreign investment.

Of course, Citigroup’s gain came as the rest of the Dow endured a horrible day, closing down nearly 247 points, or 1.92 percent, as investors continued to be rattled by fears that the mortgage-led housing crunch was dragging the U.S. into a recession.

Disclosure: The author held no positions in either C or MER when this post was originally published.