Citi sees $9 bln writedowns at U.S. investment banks

Mon Mar 10, 2008 10:17am EDT

A man is reflected in the Citibank logo in Tokyo November 5, 2007. Citigroup forecast $9 billion of writedowns at U.S. investment banks in the first quarter of 2008, primarily driven by additional leveraged loan and mortgage-related losses. REUTERS/Toru Hanai

A man is reflected in the Citibank logo in Tokyo November 5, 2007. Citigroup forecast $9 billion of writedowns at U.S. investment banks in the first quarter of 2008, primarily driven by additional leveraged loan and mortgage-related losses.

Credit: Reuters/Toru Hanai

(Reuters) - Citigroup forecast $9 billion of writedowns at U.S. investment banks in the first quarter of 2008, primarily driven by additional leveraged loan and mortgage-related losses.

The brokerage also cut its price target on several asset managers including Calamos Asset Management Inc (CLMS.O) and T. Rowe Price Group (TROW.O).

Calamos Asset's performance had deteriorated in early 2008 and Citigroup said it does not see a rapid turnaround in outflows during the year.

The brokerage said though T. Rowe was one of the best-positioned asset managers to drive meaningful earnings growth, the stock had priced in the prospects and investors should wait for a better entry point to become more aggressive on the shares.

Lehman Brothers Holdings Inc LEH.N was most exposed to residential mortgage deterioration during the last week of the quarter, analyst Prashant Bhatia wrote in a note to clients on Friday. He forecast writedowns of $1.6 billion at Lehman.

Bhatia also forecast writedowns of $3.2 billion at Goldman Sachs Group Inc (GS.N), $2.9 billion at Merrill Lynch & Co Inc MER.N and $1.2 billion at Morgan Stanley (MS.N).

Following are the price target changes made by Citigroup:

Stock Price Target Rating

New Old

T. Rowe Price $54 $60 Hold

Calamos $20 $24 Hold

Lazard (LAZ.N) $40 $50 Hold

Och-Ziff Capital (OZM.N) $25 $29 Hold

Franklin Resources (BEN.N) $102 $112 Hold

Fortress Investment (FIG.N) $14 $19 Hold

Legg Mason (LM.N) $85 $95 Buy

Blackstone Group (BX.N) $30 $33 Buy

(Reporting by Amulya Nagaraj and Aditi Samajpati in Bangalore; Editing by Amitha Rajan, Bernard Orr)

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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