Jan 15 (Reuters) - Banc of America Securities - Merrill Lynch widened its fourth-quarter loss forecast for Citigroup (C.N) a day before the company is due to report its quarterly results, to reflect additional write-offs and credit costs.
In a note, analyst Guy Moszkowski wrote, “Continued uncertainty over toxic positions, consumer credit deterioration and future strategy mean limited earnings visibility” for Citigroup.
The analyst increased his expected mark-to-market loss in Citigroup’s portfolio of illiquid securities to $8 billion from $4 billion. [ID:nWNAB0214]
The raise in loss forecast by Banc of America - Merrill Lynch comes after Citigroup had earlier this week reversed its fourth-quarter profit view on Bank of America (BAC.N) to a loss.
Moszkowski also said he remained concerned about the spinoff of Smith Barney and said the move may require a considerable equity infusion, creating more dilution.
Citigroup agreed to merge its Smith Barney brokerage with Morgan Stanley’s (MS.N) wealth management unit on Tuesday, and is expected to make further asset sales to raise capital and to isolate toxic assets from the rest of the bank.
Shares of Citigroup were trading down 15 percent at $3.85, as financials continued to be a drag on the overall market. (Reporting by Sweta Singh in Bangalore)