Citigroup would have to take writedowns of as much as $16.2bn if it were to follow Merrill Lynch’s example and write down its $22.7bn of CDOs to similar levels, according to Goldman Sachs analyst William Tanona . Deutsche Bank, however, estimates that Citi could suffer writedowns of $8bn on its monoline exposure and remaining CDO portfolio - the largest of the banks, notes Lex. Citi said this month it valued its CDOs at about 61 cents on the dollar, and people close to the bank said the bulk of its CDOs dated to years prior to 2005 – before the onset of the housing crisis. As a result, Citi was comfortable valuing them at current levels, they said. Older vintages, however, “are not immune as house price falls continue”, adds Lex, predicting that Citi probably faces further writedowns, though not perhaps to Merrill’s clearance price.
