Tuesday, March 4, 2008

Merrill's John Thain Says Citigroup Needs A Lot More Cash

Merrill's John Thain Says Citigroup Needs A Lot More Cash
Posted by John Carney, Mar 04, 2008, 9:54am
It's not just the heads of giant Persian Gulf funds who are trash-talking each other's favorite banks, the chief executives of rival institutions are getting into the mix too. In a meeting with a group of Wall Street analysts recently, Merrill Lynch chief executive John Thain said that he believes that Citigroup will need another large capital injection.
His words were echoed today at a private equity conference in Dubai, where the top man of Dubai International Capital, Sammer al-Ansari, was asked about the billions of invested in Citigroup by rival sovereign wealth funds and Prince Walid bin Talal. "It's going to take more than that to rescue Citi," he said.
Thain did not go into specifics about the financial condition of Citi but his words struck a chord with those at the meeting. Today news reports say that analysts at Merrill Lynch have reduced their full-year earnings forecast for Citigroup and projected that the bank could book another write-down of debt tied to souring mortgages. But hearing the words from Thain himself had a powerful effect on those present. If Wall Street's ultimate insiders are this negative on the prospects of their rivals, perhaps the downturn on Wall Street could be even worse than expected.
Both Merrill Lynch and Citi have suffered badly from the financial market turmoil that began last year. Merrill has written down $24.5 billion in losses, while Citigroup has recorded $22.4 billion in losses.

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