Prominent Oppenheimer bank analyst Whitney resigns

NEW YORK (Reuters) - Meredith Whitney, the banking analyst who became famous by correctly predicting much of the sector's carnage, as well as a Citigroup Inc (C.N) dividend cut and capital raising, has resigned from Oppenheimer & Co to start her own firm.

Oppenheimer confirmed the departure of Whitney, 39, who is expected to start a firm that carries her name.

In late October 2007, when the global credit crisis was in its early stages, Whitney said Citigroup would need to reduce its dividend and raise at least $30 billion of capital.

Within three months, both predictions came true.

"I've never been a shrinking violet and I'm not afraid to make big calls," Whitney said in a January 2008 interview. "Good research has such greater value in bad markets."

Citigroup has since slashed its quarterly dividend to a penny per share, taken $45 billion from the U.S. Treasury Department's Troubled Asset Relief Program and gotten a government bailout that limits losses on $301 billion of troubled assets.

As the credit crisis worsened, Whitney remained bearish on the banking sector and last month predicted a fresh round of capital raising in the sector.

Fortune magazine in September named Whitney one of the 50 most powerful women in business. Whitney is married to John Layfield, a World Wrestling Entertainment Inc (WWE.N) champion.

(Reporting by Jonathan Stempel; Editing by Andre Grenon)