(Reuters) - Fox-Pitt said about $79.4 billion of Citigroup’s (C.N) troubled assets may be eligible for sale under the government’s proposed bail out plan, adding the company need not raise capital to remain “well-capitalized.”
Analyst David Trone noted Citi may however raise capital just to appease market concerns about its risk and soundness.
The brokerage estimates that of the $79.4 billion worth assets, $22.4 billion will be in sub-prime and $21.5 billion in residential loans.
The analyst said Citi may have to take a pre-tax charge of $21 billion if assets were to be transferred to Troubled Assets Relief Program (TARP) at market prices.
“However, if assets are transferred at near held-to-maturity price levels, this charge could be significantly lower or possibly, result in a gain,” Fox-Pitt said in a note to clients.
In a pessimistic scenario, the brokerage estimates asset valuations at 10 percent below its clear the market prices resulting in a $27.0 billion pre-tax charge.
Fox-Pitt’s rating and price target on Citigroup remained unchanged, it said.
Reporting by Santosh Nadgir in Bangalore; Editing by Dinesh Nair