UPDATE 1-Fox-Pitt sees Citigroup passing stress test

Mon May 4, 2009 4:57pm BST

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(Recasts adds details) May 4 (Reuters) - Fox-Pitt expects Citigroup Inc (C.N) to pass the U.S. government's stress test, going by its analysis, and termed reports suggesting the government is projecting Citigroup to have a $10 billion shortage of capital as "puzzling".

Most of the banks that were tested will have only modest shortfalls and bank stocks will not collapse after the government releases results of the test on May 7, it said. On May 1, the Wall Street Journal reported that Citigroup may need to generate up to $10 billion in new capital to meet the requirements of the stress tests.

The government created the stress tests as a way to measure the capital needs of the nation's 19 largest banks and their ability to withstand a variety of economic scenarios.

Fox-Pitt also expects the stress tests to project capital deficiency at a few banks, "giving the test credibility in the eyes of critics."

(Reporting by Supantha Mukherjee in Bangalore; Editing by Vinu Pilakkott)

((supantha.mukherjee@thomsonreuters.com; within U.S.+1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters messaging: supantha.mukherjee.reuters.com@reuters.net;)) Keywords: CITIGROUP/RESEARCH FOXPITT

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