Tuesday, August 12, 2008

Banks' Credit Losses Top $500 Billion on Writedowns

  
Bloomberg, Yalman Onaran, 12 August 2008

Banks' losses from the U.S. subprime crisis and the ensuing credit crunch crossed the $500 billion mark as writedowns spread to more asset types.

The writedowns and credit losses at more than 100 of the world's biggest banks and securities firms rose after UBS AG reported second-quarter earnings today, which included $6 billion of charges on subprime-related assets.

The International Monetary Fund in an April report estimated banks' losses at $510 billion, about half its forecast of $1 trillion for all companies. Predictions have crept up since then, with New York University economist Nouriel Roubini predicting losses to reach $2 trillion.

``It just keeps spreading from one asset to another, so it's hard to know when these writedowns will stop,'' said Makeem Asif, an analyst at KBC Financial Products in London. ``The U.S. economy needs to stabilize first. But even then, Europe could lag and recover later. There's still a lot more downside.''

Auction-rate securities have begun adding to the losses as regulators and prosecutors force banks to buy back bonds they'd sold as safe investments. UBS set aside $900 million to cover potential losses from repurchasing the securities, while Citigroup Inc. and Wachovia Corp. estimated losses at $500 million each.

The collapse of the U.S. subprime mortgage market last year has saddled banks worldwide with $501 billion of losses from declining values of securities tied to all types of home loans and commercial mortgages as well as leveraged-loan commitments.

Banks and brokers have raised $353 billion of capital to cope with the writedowns, according to data compiled by Bloomberg. The gap between losses and capital infusions, which now stands at $148 billion, has regularly narrowed to about $80 billion as capital raising follows writedown announcements.

The following table shows the asset writedowns and credit losses as well as the capital raised in response. All numbers are in billions of U.S. dollars, converted at today's exchange rate if reported in another currency. For quarterly breakdowns for each bank and region, click on WDCI.

Firm Writedown & Loss Capital Raised

Citigroup 55.1 49.1

Merrill Lynch 51.8 29.9

UBS 44.2 28.3

HSBC 27.4 3.9

Wachovia 22.5 11

Bank of America 21.2 20.7

IKB Deutsche 15.3 12.6

Royal Bank of Scotland 14.9 24.3

Washington Mutual 14.8 12.1

Morgan Stanley 14.4 5.6

JPMorgan Chase 14.3 7.9

Deutsche Bank 10.8 3.2

Credit Suisse 10.5 2.7

Wells Fargo 10 4.1

Barclays 9.1 18.6

Lehman Brothers 8.2 13.9

Credit Agricole 8 8.8

Fortis 7.4 7.2

HBOS 7.1 7.6

Societe Generale 6.8 9.8

Bayerische Landesbank 6.4 -

Canadian Imperial (CIBC) 6.3 2.8

Mizuho Financial Group 5.9 -

ING Groep 5.8 4.8

National City 5.4 8.9

Lloyds TSB 5 4.9

IndyMac 4.9 -

WestLB 4.7 7.5

Dresdner 4.1 -

BNP Paribas 4 -

LB Baden-Wuerttemberg 3.8 -

Goldman Sachs 3.8 0.6

E*Trade 3.6 2.4

Nomura Holdings 3.3 1.1

Natixis 3.3 6.7

Bear Stearns 3.2 -

HSH Nordbank 2.8 1.9

Landesbank Sachsen 2.6 -

UniCredit 2.6 -

Commerzbank 2.4 -

ABN Amro 2.3 -

DZ Bank 2 -

Bank of China 2 -

Fifth Third 1.9 2.6

Rabobank 1.7 -

Bank Hapoalim 1.7 2.4

Mitsubishi UFJ 1.6 1.5

Royal Bank of Canada 1.5 -

Marshall & Ilsley 1.4 -

Alliance & Leicester 1.4 -

U.S. Bancorp 1.3 -

Dexia 1.2 -

Caisse d'Epargne 1.2 -

Keycorp 1.2 1.7

Sovereign Bancorp 1 1.9

Hypo Real Estate 1 -

Gulf International 1 1

Sumitomo Mitsui 0.9 4.9

Sumitomo Trust 0.7 1

DBS Group 0.2 1.1

Other European banks* 7.2 2.3

Other Asian banks* 4.6 7.8

Other U.S. banks* 2.9 1.9

Other Canadian banks* 1.8 -
____ ____

TOTAL** 501.1 352.9

* Please see WDCI Help pages for a list of companies included in
``Other'' categories for Europe, Asia, U.S. and Canada.

** Total reflects figures before rounding. Some company names
have been abbreviated for space.
;