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Citigroup Shares Tumble After Analyst Sees Major Writedown

Published: Friday, 30 Oct 2009 | 2:36 PM ET

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By: Steve Liesman
Senior Economics Reporter

Citigroup [C Loading... () ] may have to write down about $10 billion in deferred tax assets in the fourth-quarter, according to CLSA banking analyst Michael Mayo. The report sent shares down over 5 percent.

Citigroup says it has no idea how any analyst, including Mayo, may have gotten to this estimate.

Mayo disclosed his expectation that more writedowns were ahead in a conference call Friday. In the wake of this disclosure, shares of banking stocks, including Citigroup, were trading lower.

Deferred tax assets can be used to offset future gains. However, if over time, a company does not have gains to offset, the value of the deferred tax assets must be written down.