April 1 (Bloomberg) -- Merrill Lynch & Co. and Citigroup Inc. had their first-quarter earnings estimates cut by Goldman Sachs Group Inc., which said the two banks may post $14 billion in writedowns on assets linked to collateralized debt obligations.

Citigroup may record a loss of $1.55 a share in the first quarter, hurt by a $12 billion writedown on CDOs linked to asset-backed securities, Goldman analysts led by New York-based William Tanona said in a note to clients today. They had previously estimated a $1-a-share loss. Goldman also cut its first-quarter estimate for Merrill Lynch to a loss of $2.45 a share from a profit of 45 cents, citing a $2 billion writedown.

``If our forecasts are correct, it is likely that these firms may need to raise additional capital in coming months,'' the analysts wrote, adding that the firms could sell shares, assets or cut dividends.

Writedowns and losses on subprime-infected assets have already cost the world's biggest financial institutions more than $208 billion since the start of 2007. Investment banking revenue has also stalled as the pace of takeovers and initial public offerings declined in the first quarter of 2008.

Zurich-based UBS AG today posted an additional $19 billion of writedowns and said it would seek $15.1 billion in a rights offering to replenish capital. Deutsche Bank AG, Germany's biggest bank, also said today it expects to book about 2.5 billion euros ($3.9 billion) in writedowns for the quarter.

New York-based Citigroup and Merrill have already tapped investors for cash. In January they said they would receive $14.5 billion and $6.6 billion from investors respectively, after getting $7.5 billion and $5.6 billion cash infusions in November and December.

To contact the reporter on this story: Edward Evans in London at at eevans3@bloomberg.net

Last Updated: April 1, 2008 04:41 EDT