Downgrade Sinks Citigroup

Citigroup (C Quote) was dropping 3% in early trading Thursday after CIBC World Markets lowered its rating on the stock and said the financial services giant might be facing a huge capital shortfall.

According to CIBC, Citi could have to cut its dividend or sell some assets in order to help raise around $30 billion in capital. The firm reduced its rating on Citi to underperform from sector perform.

Shares of Citi could come under pressure and possibly trade into the low $30s, CIBC said. In premarket action, Citi was down $1.11 to $40.25, putting the stock at a 52-week low.

Also, CIBC downgraded Bank of America (BAC Quote) to sector perform from outperform, expressing worry about the company's revenue outlook.

Bank of America closed Wednesday at $48.28.