Citigroup ( C) CEO Vikram Pandit is facing continued calls from analysts to slash the bank's dividend . On Friday, Keefe, Bruyette & Woods said it expects that fourth-quarter writedowns on mortgage securities could be as much as $15 billion to $16 billion for the nation's largest bank. That estimate is about $5 billion greater than the $11 billion Citi said it anticipated more than a month ago in the wake of the ouster of then-CEO Charles Prince. The additional writedowns and expectations that 2008 could be an uphill climb for the hobbled financial sector if the U.S. economy slips into a recession, is providing even more support for a dividend cut writes Keefe, Bruyette analyst Diane Merdian in Boston.
News You Need: January 4, 2007
"We believe it is possible Mr. Pandit and Citi's board will come to conclude that the additional flexibility from a lower dividend is worth the potential short-term pain," the analyst reports. She estimates the likelihood of such a dividend cut is greater than 50% at this point. Citi's shares fell as much as 3% before recovering slightly in the afternoon. The stock was down by about 58 cents to $28.35, a 52-week low for the financial institution. Other financials also slumped in Friday trading. CIBC World Markets analyst Meredith Whitney has for months said that Citi faced a $30 billion capital shortfall that would require it to either sell assets or break itself up. Pandit, supporting the views of its board of directors, has said during interviews that Citi likely would not need to cut its dividend.