Thursday, November 8, 2007

The Skeleton in the Closet

Nov. 7 (Bloomberg) -- Banks may be forced to write down $64 billion because of falling prices on collateralized debt obligations backed by subprime assets, Citigroup Inc. analysts said.

Wall Street has marked down prices of the asset-backed securities by about $15 billion so far, analysts led by Matt King in London wrote in a report e-mailed today. The data excludes Citigroup's own projected writedowns of as much as $11 billion announced this week.

``Of the many skeletons hiding in the subprime closet, writedowns on banks' positions on CDOs of ABS are probably the scariest,'' King wrote.

Investor concern that banks face more losses from the worst U.S. housing market in 16 years pushed shares of Citigroup to the lowest in more than four years. Royal Bank of Scotland Group Plc analysts today predicted banks may writedown between $250 billion and $500 billion because of the credit slump.


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