Who’s Next After Bear? A Wall Street Scorecard

Tuesday, March 18, 2008 4:06 p.m. EDT

The failure of Bear Stearns last week has raised questions about the health of other major banks and securities firms.
While it’s unlikely that another major player will go under, several, including Citigroup and Merrill Lynch, remain in fragile condition, experts say.

Here’s a brief prognosis for a few of the biggest financial institutions, from most vulnerable to least.

Citigroup: The nation’s largest bank has recently seen its share price drop below book value ($22.74 as of Dec. 31), a sign that investors see more losses ahead. Merrill Lynch analysts say that charge-offs on loans and investments for the first quarter could cost Citi $18 billion, leading to a loss for the period.

Oppenheimer bank analyst Meredith Whitney estimates Citigroup will have to boost reserves by more than $24 billion this year and again next year to cover credit losses. That total easily exceeds last year’s $17.4 billion and $6.7 billion in 2006.
Not everyone has given up on Citi. "We're in the midst of a panic that is similar to the panic that existed in the early '90s," Richard Bove, an analyst at Punk Ziegel, tells The Wall Street Journal.

"You won't find a single human being on the planet to say anything positive about Citigroup, which is why you may want to own it."

Merrill Lynch: Merrill is "the riskiestâ€