Analyst William Tonana estimates Citi faces $18.7 billion in losses, Merrill Lynch $11.5 billion and J.P Morgan Chase $3.4 billion. The brokerage said the write-down at Citigroup Inc. (NASDAQ:PLJC) may be enough to force the financial services corporation to cut its dividend by 40 percent, Marketwatch reported.

"What a year it's been for the investment banks. It started out with all-time highs and record-breaking results. It ended with some firms reporting their first-ever earnings losses, record write-downs of CDOs (collateralized debt obligations) and a need for capital infusions to help them through a challenging credit crisis," Tonana wrote in a report released Thursday.

CDOs are securities backed by pools of bonds, bank loans and other assets.

The Washington Post (NYSE:WPO) reported the U.S. Justice Department, Securities Exchange Commission and the New York attorney general's office are looking into whether some banks and mortgage lenders misled investors about housing assets and hid their losses.