NEW YORK - When Citigroup warned in early November that it was likely to write down its portfolio by $8 billion to $11 billion in the fourth quarter because of exposure to bad loans, investors recoiled at the size of the losses. Some now say those estimates appear drastically understated.

Citigroup Inc. could write off as much as $18.7 billion in the fourth quarter, wrote the Goldman Sachs Group Inc. analysts William F. Tanona, Betsy Miller and Neil C. Sanyal in a note to investors late Wednesday. If it does, they say, the bank may be forced to lower its dividend 40 percent.

Citi has about $55 billion in exposure to subprime mortgages, about $43 billion of which are collateralized debt obligations that have mortgages underlying them.

"We still believe it will be a couple of quarters before the current credit crisis is fully digested by the markets," the Goldman analysts wrote.

Already, Citi has been propped up by a $7.5 billion investment from the Abu Dhabi Investment Authority, a sovereign-wealth fund that in late November bought a 4.9 percent stake in the bank.

But if Citi must write down the value of its portfolio by more than it estimated in November - a distinct possibility, given the lack of improvement in the tight credit markets - Goldman analysts said the bank might need to raise an extra $5 billion to $10 billion in cash.

When Citi said Nov. 4 that its write-down could be between $8 billion and $11 billion, it acknowledged the value could end up being larger.

Citi shares fell 89 cents, or 2.92 percent, to close at $29.56. They have tumbled about 45 percent since the beginning of the year.

A dividend cut is a possibility facing many banks wrangling with their losing investments in subprime mortgages. UBS AG recently replaced its 2007 cash dividend with a stock dividend, in a cash-raising effort that included selling a $9.75 billion stake to a Singapore fund, borrowing about $11.5 billion from outside investors, and selling Treasury shares.

CIBC World Markets Inc. analyst Meredith Whitney has said for months that Citi's dividend should be on the chopping block. Earlier this month, she wrote that, along with cutting the dividend, Citigroup should raise at least $30 billion in additional capital and sell at least $100 billion in assets.

Citi's board has said it intends to maintain its dividend, but the CEO, Vikram Pandit, did not rule out a dividend cut when asked about it Dec. 11. He also did not rule out more asset sales.

Goldman increased its estimate for Citi's fourth-quarter loss to $1.33 a share, from 52 cents a share, based on the higher write-down prediction. Analysts polled by Thomson Financial, on average, predict a loss of 63 cents a share for the fourth quarter, which ends Monday.

The Goldman team also said it expected an additional $11.5 billion write-off from Merrill Lynch & Co. Inc., and increased its loss estimate for the broker to $7 a share for its fourth quarter from a loss of $1.50 a share. Wall Street, on average, expects Merrill to report a loss of $2.78 a share, according to Thomson Financial.

Goldman analysts also predict a $3.4 billion write-down at JPMorgan Chase & Co., and cut their profit estimate to 65 cents a share from $1.04. Analysts, on average, see JPMorgan posting a profit of $1.03 a share, according to Thomson Financial.