Analysts at Goldman Sachs are predicting that Citi may cut its dividend by 40 percent to preserve capital and cover sub-prime crisis write-downs, according to a report by Bloomberg.
The report cites a research note by a Goldman analyst that suggests Citi may write off $18.7 billion in collateralized debt obligations, two thirds larger than the $11 billion estimate of 4 November. The note says Citi, which paid a dividend of 54 cents each quarter this year, will have to raise $6.2 billion in extra capital to reach its target.
Analysts reckon a $7.5 billion investment by the sovereign wealth fund of Abu Dhabi is insufficient to prevent a dividend cut at Citi. The bank recently chose former Morgan Stanley President Vikram Pandit to succeed outgoing CEO Chuck Prince.
Analysts at both CIBC World Markets and Deutsche Bank are also predicting a dividend cut at Citi.