Goldman Cuts Merrill Lynch (MER) and Citigroup (C) on CDO Exposure

Goldman Sachs (NYSE: GS) cut Q1 estimates on Merrill Lynch (NYSE: MER) and Citigroup (NYSE: C). Goldman said the two banks may have $14 billion in writedowns on assets linked with CDOs.

Goldman said Citigroup may have a loss of $1.55 a share in Q1, caused by a $12 billion writedown on CDOs linked to asset-backed securities. Goldman lowered Merrill Lynch's Q1 to a loss of $2.45 a share from a profit of 45 cents, hurt by a $2 billion writedown.

Also, Goldman believes it is likely that Citigroup and Merrill may have to raise additional capital by selling shares, assets or reducing the dividends. [JT]

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