Citigroup (C) analysts expect Q409 losses for Morgan Stanley (MS), Goldman Sachs (GS), Bank of America (BAC) and JPMorgan Chase (JPM) due to a “substantial” decline in fixed-income, commodities and currencies (FICC) trading, according to a 2010 Outlook report. Citi analysts predict fixed-income trading to drop 15-to-20% in 2010 and another 5-to-10% in 2011 due to regulatory reform. The most significant expected price-cut in Q409 went to Morgan Stanley at $0.30-to-$0.36 a share due to lower FICC trading. Citi analysts estimate a $0.25 drop for Goldman Sachs, but they continue to see a positive outlook on GS because of good marketing position and management. Citi maintains its expected $0.66 estimated loss in Q409 for BofA shares, including a $4.1bn revenue hit for accretion related to its plans to repay $45bn of taxpayer funds through the Troubled Asset Relief Program (TARP). According to a report from Bloomberg, BofA warrants held by the Treasury could be worth $1.5bn, giving US taxpayers nearly $203m more than original estimates. JPMorgan received a $0.15-to-$0.55 expected loss in Q409, but because of its stronger capital position and some signs of recovery, Citi changed its risk rating for JPMorgan from “High” to “Medium.” What isn’t showing signs of recovery is the commercial real estate sector. In a recent survey conducted by Grant Thornton, an advisory organization, the majority of banking executives reported expected loan losses in their commercial loan portfolios. Specifically, commercial real estate loans could show losses of 55%, compared to residential real estate losses at 12%. “It appears that Southeast bankers believe that the worst of the residential real estate losses is over; while Northeast bankers seem to be predicting that the worst is yet to come for residential portfolios,” said Rick Huff, the financial institutions partner in Grant Thornton. Thornton's results are expected given record increases in delinquent commercial-mortgage backed securities (CMBS) that could double by 2012, according to the rating agency, Fitch. Write to Jon Prior.