Banks have announced more than $50 billion of write-downs tied to the U.S. housing slump, as defaults soared and the value of mortgages that investors deemed too risky plummeted.
The projected $8 billion to $11 billion write-down is on top of a top of a $1.83 billion mortgage-related loss that Citigroup took in the third quarter. The New York-based bank on Nov. 4 said it had no plans to cut its dividend.
Goldman expects an $11 billion write-down this quarter, and $4 billion in the first quarter of 2008. A $15 billion loss would, after taxes, wipe out close to six months of profit.
"(The) risk taking culture may be irreparably damaged," Tanona wrote.
Among 19 analysts who cover Citigroup, eight rate it "buy" or the equivalent, eight rate it "hold" and three rate it "sell," according to Reuters Estimates.
Tanona issued his report after Citigroup strategist Levkovich on Nov. 16 upgraded the banking sector, saying it has "compelling valuations and beaten down earnings estimate revisions, not to mention repulsive sentiment around these stocks, a contrarian signal."
Levkovich also wrote that worries about subprime exposures have created a "pile-on effect that seems to be overdone." He admitted his upgrade may seem "fairly controversial."