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This is going to be an ugly week for bank earnings. At CNBC, Charlie Gasparino writes:

Citigroup could write down as much as $24 billion due to subprime and credit-related losses, CNBC has learned. In addition, the company could lay off as many as 20,000 workers as part of a comprehensive plan to slash costs and raise capital.

The plans will be unveiled Tuesday, when it reports fourth-quarter earnings. At the same time, Citigroup could also announce that it is cutting its dividend payment.

Citigroup also intends to raise as much as $15 billion from various foreign and domestic entities including Saudi Arabian Prince Alwaleed bin Talal, Citigroup's largest individual shareholder, as America's biggest bank grapples with heavy mortgage market losses.

Alwaleed has owned his Citi stake since the early 1990s and helped engineer a previous rescue plan for the bank more than a dozen years ago. According to a report on the Wall Street Journal's Web site, he is likely to keep his total stake in the bank below 5 percent to avoid regulatory scrutiny.

By raising so much captial, Citigroup CEO Vikram S. Pandit is hoping layoffs can be kept to a minimum.

In my opinion, the truly scary part is that we don’t know what we don’t know. These products are so opaque, it’s difficult for anyone to properly analyze what’s truly happening. I also think this ruins the chance that Robert Rubin will be part of any future Democratic administration.

Posted by edelfenbein at January 14, 2008 10:03 AM