NEW YORK (Reuters) - Major Wall Street banks and brokerages, struggling under the weight of large subprime mortgage holdings whose value has plunged steeply, may take additional write-downs of between $30 billion and $40 billion in the fourth quarter, a top analyst predicted on Monday.
"Everybody will have write-downs in the fourth quarter," Charles Peabody, partner at New York-based research firm Portales Partners LLC, said at the Reuters Finance Summit in New York.
Citigroup Inc (C.N: Quote, Profile, Research, Stock Buzz), the largest U.S. bank by assets, has said it expects to write down between $8 billion and $11 billion for subprime mortgages, and cut its previously reported third-quarter profit due to worsening credit market problems.
Citigroup's write-downs mostly relate to its $43 billion of collateralized debt obligations, or CDOs, whose value is tied to subprime mortgages.
Peabody said he expects more write-downs from Citigroup. He also said there may be write-downs at Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz), which posted a 79 percent increase in third-quarter profit in September.
He said banks like Goldman and Lehman Brothers Holdings Inc LEH.N may not have hedged their mortgage exposure sufficiently to avoid write-downs.
"When Lehman reported third quarter, we said it's a quarter not to be believed," Peabody said. "I really don't believe those two organizations have come clean."
Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz) was the only big Wall Street firm to post a third-quarter loss after writing down $8.4 billion on investments linked to subprime mortgages that turned sour.
Goldman, Bear Stearns Cos Inc BSC.N, Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) and Lehman have collectively written down $3.6 billion so far.
(Reporting by Anupreeta Das, editing by Braden Reddall)
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