Fears that banks could still be feeling the impact of the credit squeeze by Christmas next year drove down shares globally on Monday after Goldman Sachs predicted a further $48bn of writedowns by the end of 2008 – including warnings that Citigroup could be forced to make $15bn in credit-related writedowns and advice to investors to sell the shares. The report of Goldman’s three leading banking analysts – the trio who foreshadowed Merrill Lynch’s writedowns last month – helped prompt large falls on stock markets on both sides of the Atlantic, taking European indices to their lowest point since August. Banks’ cashflow concerns are also continuing to push up money market rates. Asian shares extended the losses on Tuesday, according to Bloomberg, while Reuters reports that Citi shares fell nearly 6% in New York on Goldman’s warning.
