Merrill Lynch and Citigroup could become the latest investment banks to be forced into raising more capital from investors after both Wall Street lenders saw their first quarter profit estimates cut on rising mortgage-backed debt losses.

Citigroup is now forecast to write down $12 billion (£6 billion) in the first three months of 2008 on its portfolio of collateralised debt obligations (CDOs), which are pools of mortgage-backed assets. A further writedown would be in addition to the $18 billion hit the US banking giant took on its assets in the fourth quarter of 2007.

Merrill Lynch is expected to write down $2 billion on its CDO portfolio, adding to the $16 billion write-off already notched up by the bank.

These latest writedowns would bring the total loss to the global banking industry from sub-prime related assets to about $210 billion.

William Tanona, an analyst for Goldman Sachs, is forecasting that both banks will have to boost their balance sheets further by raising additional capital, despite Merrill Lynch already raising $12.8 billion through the Korean Investment Corporation, the Kuwait Investment Authority and Mizuho Corporate Bank.

Like other investment banks, Citigroup and Merrill Lynch have been able to take advantage of billions of dollars worth of funding made available by the US Federal Reserve as well as the opportunity to swap "toxic" mortgage-backed assets with America's central bank in an effort for US lenders to clean up their balance sheets.

Today, UBS confirmed that it will raise SwFr15 billion (£7.57 billion) through a rights issue after revealing a $19 billion writedown, forcing the bank's chairman, Marcel Ospel, to resign. UBS has already raised SwFr13 billion from GIC, a Singapore sovereign wealth fund, and an unnamed Middle East investor.

Citigroup's writedown would give the bank a loss of $1.55 a share, up from the $1-a-share loss Mr Tanona had previously forecast. Mr Tanona to lower his first-quarter earnings forecast for Merrill Lynch from a 45 cent-a-share profit to a $2.45 a share loss.

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