Bank writedowns related to monoline bond insurers will be concentrated largely at firms UBS ( UBS), Citigroup ( C) and Merrill Lynch ( MER), according to an Oppenheimer & Co. report released on Wednesday.

Oppenheimer financial analyst Meredith Whitney estimates that the risk of downgrades by rating agencies of monoline names MBIA ( MBI) and Ambac Financial ( ABK) would rack up at least $40 billion in writedowns and as much as $75 billion. UBS, Citi and Merrill would be among the hardest hit because those institutions hold about 44% to 45% of the risk exposure.

As a result, Whitney notes that a systemic banking crisis caused by monoline downgrades might not be as great a risk as many believe, given the disproportionate exposures at the three banks. New York Insurance Superintendent Eric Dinallo is spearheading an effort involving major Wall Street banks to craft a massive rescue plan to preserve the insurers' critical triple-A ratings, but said last week that any action will "take some time."

"Importantly, because we estimate that almost half of this risk is concentrated amongst three financial institutions with the remainder broadly distributed amongst many, there is no systemic risk at hand or immediate justification for a systemwide bailout, in our view," Whitney wrote in her note.

Whitney was not available for comment. The analyst has long been bearish on Citi, correctly calling the that bank would have to cut its dividend months before it did.

Share of Citi, Merrill and UBS were all recently down 1%, as stocks were stuck in neutral ahead of Wednesday afternoon's expected Federal Reserve fed funds rate decision.

Whitney estimates that Merrill, Citi and UBS's heavy origination in 2007 of funky mortgage paper known as collateralized debt obligations account for the trio's massive exposures to monoline bond downgrades. CDOs are pools of debt that has been sliced and diced into pieces that are then rated by Fitch Ratings, Moody's Investors Service and Standard & Poor's and sold to investors.

Merrill and its peers typically sell a large portion of the CDOs originated, but held onto what was considered the highest-rated pieces, known as super-senior triple-A paper. Those arcane securities, which should be valued at 100 cents on the dollar, however, have already plummeted in value to as little as 20 cents on the dollar in some cases amid the mounting mortgage crisis. The massive decline in value so far has served up huge losses on the balance sheets of investment banks and financial firms, and a downgrade of monolines means further pain.

Merrill originated $31 billion in CDO paper last year, representing 18% of the total origination volume. Citi grabbed CDO origination market share of 16%, issuing $28 billion. UBS kicked in $21 billion for a share representing 10%, the analyst estimates.

"The market share of origination was so skewed toward the top three that they encompassed the equivalent of 13 of the top 20 issuers' volume between three companies," Whitney writes in her report.

Whitney's research report comes on the heels of Zurich-based UBS' warning of a fourth-quarter net loss of $11.4 billion or 12.5 billion Swiss francs. The bank said the loss was driven by writedowns of about $14 billion to U.S. subprime paper. French bank BNP Paribas also posted a 42% decrease in fourth-quarter profit to $1.47 billion, along with a writedown equivalent to about $870 million on its exposure to monoline insurers.

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