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Goldman Sachs took the knife to its Wall Street rivals yesterday, predicting that the credit crunch would force Citigroup to slash its dividend by 40 per cent. At the same time it emerged that Merrill Lynch was preparing to cut 1,600 jobs from its trading desks. William Tanona, a leading Goldman Sachs analyst, said that Citigroup, the world’s largest bank, would have to cut its payout to shareholders to preserve its capital position and write off $18 billion ($£9 billion) of assets in the fourth quarter, compared with earlier estimates of $11 billion. Goldman said that Citigroup would need fresh capital of between $5 billion and $10 billion in addition to a recent $7.5 billion commitment from the Abu Dhabi Investment Authority. Under that deal, the Abu Dhabi sovereign wealth fund is protected from a possible dividend cut, as it bought Citigroup bonds convertible into stock. The bonds, which will vest into a 5 per cent shareholding on conversion, pay an annual coupon of 11 per cent, compared with the existing dividend yield for shareholders of 7.3 per cent. Citigroup$’s largest shareholders include Capital Research & Management, with 4.6 per cent, Prince Alwaleed bin Talal, who controls 3.97 per cent, and Barclays Global Investors, with 3.76 per cent. Mr Tanona said that he had raised his loss estimates for Merrill Lynch and JPMorgan and forecast that, combined with Citigroup, the three will have chalked up $33.6 billion of writedowns in the fourth quarter. Goldman said it now forecast that Merrill and JPMorgan would record increased writedowns of $11.5 billion and $3.4 billion respectively $– up from $6 billion and $1.7 billion. Most of the writedowns are linked to the banks$’ exposure to collateralised debt obligations, special debt instruments that were invested in risky assets, such as US sub-prime mortgages. Mr Tanona said: “We still believe it will be a couple of quarters before the current credit crisis is fully digested by the markets.”

CITIGROUP Inc, the biggest US bank, may cut its dividend by 40 percent to preserve capital and write down more fixed income securities than it has told investors to expect, according to Goldman Sachs Group Inc. The New York bank may write off US$18.7 billion in collateralized debt obligations such as subprime mortgages, up from its November 4 estimate of as much as US$11 billion, Goldman's William F. Tanona wrote in a note on Wednesday. Citigroup, which paid out 54 cents each quarter this year, will have to raise US$6.2 billion in extra capital to reach its target, they wrote. "It will be a couple of quarters before the current credit crisis is fully digested by the markets," wrote Tanona, who has a "sell" rating on the stock. "Given the magnitude of the writedowns we assume and Citi's remaining exposure, we believe the firm has a serious need to preserve or raise additional capital." Chief Executive Officer Charles O. "Chuck" Prince III

NEW YORK (Reuters) - Citigroup Inc (C.N) may need to slash its dividend 40 percent to preserve capital, and with Merrill Lynch & Co (MER.N) and JPMorgan Chase & Co (JPM.N) may write off $33.6 billion of debt this quarter as the global credit crunch deepens, a Goldman Sachs & Co analyst said.

A $7 billion (£3.5 billion) structured investment vehicle (SIV) that was one of the first to suffer turbulence from the credit crunch was poised to be rescued last night after securing a bailout deal arranged by Goldman Sachs.

Stronger stock markets and the international credit crunch helped to push the final-salary pension schemes of Britain’s blue-chip companies back into the black to the tune of £15 billion this year, it is reported today.

An agreement has been reached on the sale of Cheyne Finance, a structured investment vehicle now known as S.I.V. Portfolio, to bidders including Goldman Sachs, the fund’s receivers, Deloitte & Touche said. The $7 billion S.I.V. Portfolio, managed by the hedge fund Cheyne Capital Management, went into receivership in September. The agreement comes after talks with a number of bidders over the last few weeks and consultation with the informal creditors’ committees, Deloitte said. Under the deal, certain reinvestment opportunities will be offered to some existing creditors of the company. S.I.V.’s, held by banks, hedge funds or other institutions, issue a mixture of short-term debt and capital and buy longer-term assets, which may pay more interest than the amount they pay on their notes. The vehicles encountered trouble in August when liquidity in the credit markets dried up as investors faced exposure to the subprime market.

An investor committee working to fix this country's $33-billion market for non-bank asset-backed commercial paper is "virtually certain" that big Canadian banks will chip in their share of a $14-billion credit facility at the heart of a proposed restructuring deal, but has a backup plan - just in case.

CARPETRIGHT Plc, the UK's largest carpet retailer, dropped to a four-year low in London trading after managers led by Chairman Philip Harris scrapped their 630 million-pound (US$1.2 billion) plan to buy the company. The shares fell as much as 11 percent to 785 pence in London, heading for the lowest close since December 15, 2003. They slid 18 percent on December 21 after the Rainham, England-based company said discussions had ceased, citing deteriorating credit markets. The announcement was made about two minutes before trading ended. Turmoil in the credit markets hampered the executives' ability to secure funding, Harris said. Bloomberg News reported the pace of takeovers worldwide had fallen by about a third since the end of the second quarter, with companies such as Virgin Media Inc and Cadbury Schweppes Plc delaying asset sales amid signs economic growth in countries from the US to Britain is ebbing. "The prospects for the group are undiminished given its market leading

CENTRO Properties Group, the Australian owner of US malls which lost 80 percent of its market value last week, has hired three advisers to help it refinance debt and negotiate funding options that may include selling assets. Lazard Carnegie Wylie will "facilitate any transaction" and find investors to help repay or settle bank debt, Jim Kelly, a spokesman for Centro in Sydney, said yesterday, Bloomberg News reported. KPMG will negotiate with Centro's bankers to help refinance A$3.9 billion (US$3.4 billion) by a February 15 deadline and Freehills will act as the company's legal advisers, Kelly said. Chief Executive Officer Andrew Scott said last week he may sell some of Centro's more than A$25 billion of shopping centers in the US, Australia and New Zealand after more than A$4 billion was wiped from the company's market value, making it Asia's worst casualty so far of the global credit squeeze. Melbourne-based Centro's eight most valuable properties are in Australia and

Analysts predict that next year’s initial public offerings will include a steady stream of activity, including credit card issuer Visa’s $10 billion I.P.O., Reuters reported. Visa, the biggest deal so far in 2008, is coming to market after MasterCard’s stellar $2.4 billion 2006 I.P.O. The company said late on Friday its plans to list the shares [...]

Goldman Sachs on Friday agreed to buy a $260.5 million stake in First Marblehead, shoring up the troubled student-loan company and sending its stock soaring. The investment bank also agreed to extend a $1 billion credit line to First Marblehead, providing a crucial source of financing for the company. Shares of First Marblehead surged 66.4 percent [...]

VISA Inc, the biggest credit-card company, had an US$861-million loss this year on US$2.65 billion in litigation costs, most from settling an antitrust suit brought by rival American Express Co. Legal expenses reversed gains for the San Francisco-based company. Revenue in the fiscal year ended September 30 rose 33 percent to US$5.19 billion, Visa said on Friday in a regulatory filing, Bloomberg News said. The loss compares with a profit of US$453 million in 2006, Visa said. Visa's November 7 settlement with American Express, the third-largest credit-card network, cleared the way for its planned initial public offering next year. The company wants to capitalize on consumers' growing preference for credit and debit cards over cash and checks. MasterCard Inc, the No. 2 network, has gained more than 400 percent since going public in May 2006. American Express sued Visa in November 2004 after the US Supreme Court ruled Visa and MasterCard violated antitrust laws by preventing

UNITED Rentals Inc, the largest construction-equipment rental company in the United States, lost a bid to force a US$4-billion takeover by Cerberus Capital Management LP when a judge ruled the agreement allowed the buyer to withdraw its offer. Delaware Chancery Court Judge William Chandler ruled on Friday that United Rentals officials should have known that Cerberus executives believed they had a right to pull out of the deal at any time as long as they paid a US$100 million fee. United alleged that Cerberus's RAM Holdings buyout entities agreed in July to pay US$34.50 per share for United Rentals' stock, and reneged on the deal in November amid weakened US credit markets. The stock has been trading in the low-US$20 range. United Rentals fell US$3.69 to US$17.91 on Friday. "The board of directors and management team of United Rentals will consider its alternatives under the circumstances, and they continue to believe strongly in United Rentals' future prospects,"

CITIGROUP Inc, Bank of America Corp, and JPMorgan Chase & Co have abandoned a United States Treasury-sponsored plan to buy assets from cash-strapped structured investment vehicles. The "SuperSiv" fund brokered by Treasury Secretary Henry Paulson, said to be about US$80 billion when it was announced in October, "is not needed at this time," the banks said. The need for a bailout has diminished as HSBC Holdings Plc, bond insurer MBIA Inc and other companies that manage SIVs arranged their own rescues. The steps lessened the threat that SIVs would dump their holdings and further affect credit markets suffering from losses in securities tied to subprime mortgages. New York's Citigroup said last week it would guarantee US$58 billion in debt from SIVs it manages in order to avoid a sale of the assets, Bloomberg News reported. More than 20 banks, SIVs and investment managers participated in the discussion with BlackRock Inc the adviser, the statement said. The banks

It was a painful lesson. In May – months before the words credit crunch became common currency – China’s fledgling sovereign wealth fund, China Investment Corporation (CIC), backed the flotation of the Blackstone private-equity group to the tune of $3 billion ($£1.5 billion). The investment bought it a stake of almost 10%.

After just a few months in her new role as Bank of the West's first private banker for most of Kansas, Kelly Uran has been promoted to vice president for the $59 billion, San Francisco-based bank. The promotion comes about the same time Uran and her private banking colleagues in three other Midwestern cities have exceeded their first-year goals in developing a private banking business for Bank of the West's Great Plains division. "Since (the launch of private banking in the Midwest) the group has brought in $21 million in new loans and over $11 million in new deposits," said Bob Wolff, Bank of the West spokesman in Los Angeles. "That's fairly significant." In April, Bank of the West began rolling out private banking across its entire system, which is spread across 19 Western and Midwestern states. Private banking is a package of credit and deposit products and services to wealthy customers -- whom the bank defines as people with more than $500,000 in liquid assets, a household annual income of $250,000 or a net worth of at least $1 million, not including their home.

NEW YORK -- Singapore's state-owned investment fund is considering a $5 billion investment in Merrill Lynch, according to a report Friday, potentially providing the nation's biggest brokerage firm with much-needed cash as it deals with billions of dollars in credit losses.

The auction process is part of a coordinated action with central banks around the world, trying to address a global credit crunch.

LEHMAN Brothers Holdings Inc, the largest US underwriter of mortgage-backed bonds, faces legal action by Australian municipal governments after the value of their subprime-related investments dropped as much as 86 percent. Wingecarribee Shire Council, in the Southern Highlands in New South Wales, is suing Lehman for "deceptive and misleading conduct" in selling A$3 million (US$2.6 million) of subprime-linked collateralized debt obligations, the council's managing director Mike Hyde said in a media statement yesterday. New York-based Lehman, which manages up to A$1 billion on behalf of 35 councils in New South Wales and Western Australia, may face further action as the assets in its US mortgage-linked product have declined amid a shakeout in global credit markets, Bloomberg News said. "We strongly deny the claims made in the press statement that we have not acted in their best interests, or that we have engaged in any misleading or deceptive conduct," Sinead

ICBC Credit Suisse Asset Management Ltd announced it will raise up to 22 billion yuan (US$2.87 billion) under the Qualified Domestic Institutional Investor scheme. The subscription period for the fund, named the China Opportunity Global Stock Fund, will run from January 3 to February 1. It includes both individual and institutional investors via all major banks and securities companies in the country. Thus far, only four QDII products exist - the JPMorgan Fund QDII, Harvest Overseas Fund, Huaxia Global Selected Stock Fund and Southern Global Enhanced Balanced Fund. Different from the first batch of QDII, the China Opportunity Global Stock Fund will focus on Chinese mainland listed companies in overseas markets and foreign companies that will benefit from China's economic growth. The QDII fund plans to allocate more than 60 percent of its assets in stocks, but will also invest in government bonds, repurchase agreements, stock index futures and derivatives.