Citi, Merrill Writedowns Expected: Analyst

Citigroup(C Quote - Cramer on C - Stock Picks) may have to write down $9 billion and raise additional capital in the second quarter, while Merrill Lynch(MER Quote - Cramer on MER - Stock Picks) could write down $4.2 billion, a Goldman Sachs analyst wrote Thursday.

Analyst William Tanona said he sees wider losses for the two companies, among the hardest hit financial institutions on Wall Street during the credit crunch. He sees Citi's losses jumping to 75 cents a share, from his earlier view of 25 cents a share, and he expects Merrill to lose $2 a share, from his earlier prediction of 25 cents.

Citi last week warned it would incur more writedowns in the second quarter, but said they would be less than the $12 billion in writedowns in the first quarter.

A separate Goldman analyst also downgraded General Motors(GM Quote - Cramer on GM - Stock Picks) to sell, from neutral, citing potential dilution of shareholder's stock if the automaker has to raise capital.

Citi shares were falling 4.3% to $18.04 in recent premarket trading.