Spread around enough so no one went out of business, and most lost less then a quarter’s worth of earnings. And a chunk of it probably recoverable.

It’s been a year and the total has to be at the low end of expectations, but could be a lot more to surface in a lot of small pieces around the world.

Seems that only when the Fed sees signs of general progressive improvement vs the current perception of continuing deterioration will they stop cutting.

Subprime Bank Losses Reach $133 Billion, Led by Merrill: Table

by Yalman Onaran

Jan. 22 (Bloomberg) The following table shows the $133 billion in asset writedowns and credit losses since the beginning of 2007, including reserves set aside for bad loans, at more than 20 of the world’s largest banks and securities firms.

The charges stem from the collapse of the U.S. subprime mortgage market and its repercussions on the rest of the housing industry. The figures, from company statements and filings, incorporate some credit losses or writedowns of other mortgage assets caused by subprime crisis.

Analysts estimate additional writedowns and credit losses of $23.5 billion, which would bring the total to $157 billion. All figures are in billions and are net of financial hedges the firms used to mitigate their losses.


Firm Writedown Credit Loss Total
Merrill Lynch $24.5 $24.5
Citigroup 19.6 2.5 22.1
UBS 14.4 14.4*
HSBC 0.9 9.8 10.7
Morgan Stanley 9.4 9.4
Bank of America 7 0.9 7.9
Washington Mutual 0.3 6.2 6.5**
Credit Agricole 4.9 4.9*
Wachovia 2.7 2 4.7
JPMorgan Chase 1.6 1.6 3.2
Canadian Imperial (CIBC) 3.2 3.2**
Barclays 2.7 2.7*
Bear Stearns 2.6 2.6
Royal Bank of Scotland 2.5 2.5*
Deutsche Bank 2.3 2.3
Wells Fargo 0.3 1.4 1.7
Lehman Brothers 1.5 1.5
Mizuho Financial Group 1.5 1.5
National City 0.4 1 1.4
Credit Suisse 1 1
Nomura Holdings 0.9 0.9
Societe Generale 0.5 0.5
Japanese banks
(excluding Mizuho, Nomura)
0.8 0.4 1.2
Canadian banks
(excluding CIBC)
1.4 0.1 1.5
____ _____ _____
TOTALS*** $107 $26 $133

* Includes losses the company expects to report in the fourth quarter of 2007.
** Includes losses the company expects to report in the first quarter of 2008.
***Totals reflect figures before rounding.

–With reporting by Samar Srivastava in New York, Doug Alexander in Toronto. Editors: Steve Dickson, Dan Kraut.

2 Responses

  1. Hi

    Firstly, thanks for sharing your thoughts Warren, it has been most enlightening reading.

    I have recently read an essay on the history of US Banking. The author suggested that currently, traditional regulated banks are very well hedged against credit risk default (as a result of regulators and bankers reacting to the last crisis). The author also suggests that this has left these same banks heavily exposed to interest rate risk.

    A. is this a reasonable scenario?
    B. if yes, would the US authorities (eg: Fed) be aware of this type of info?
    C. if the Fed were to get agressive (a la Volker) to fight inflation, could we expect problems to emanate from this scenario?

    I have little knowledge of US banking structure so any thoughts would be appreciated.


  2. Yes, the banks are well diversified and manage credit risk well enough to not get seriously damanged by the likes of the recent credit crisis

    And banks also have strict ‘gap’ requirements so they are generally not exposed to interest rate risk

    the inflation fight would mean higher rates which ultimately help banks as they tend to have a lot of compensating balances in client accounts that earn more interest for the banks. They only get hurt if rates get too high for borrowers to afford.

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