Checking to see which bank is revealing billion-dollar losses in its portfolio has become something of a daily routine on Wall Street. On Thursday, traders fretted about Barclays' multibillion dollar writedown over their morning coffee.
The British bank estimated it would write down US$2.7 billion for losses on securities linked to mortgages for borrowers with poor credit. Barclays, along with Wells Fargo & Co, SunTrust Banks Inc and General Electric Asset Management joined the slew of financial companies anticipating, in total, more than US$30 billion in losses this quarter.
That figure doesn't exceed the roughly US$44 billion written down by financial institutions in the third quarter, but the fourth quarter is only half-way over -- leaving investors wondering how many more writedowns are on the way.
Deutsche Bank analysts estimate that over the next few years, the current credit crisis will have led to about US$300 billion to US$400 billion in losses for companies with investments exposed to subprime loans.
Wells Fargo and SunTrust officials said on Thursday they anticipated more losses from defaulting mortgages this quarter, although they have little exposure to the problematic debt instruments known as collateralized debt obligations (CDO).
"We have not seen a nationwide decline in housing like this since the Great Depression," Wells Fargo chief executive officer John Stumpf said.
General Electric Asset Management said on Thursday that outside investors had withdrawn US$600 million from a US$5.6 billion fund involving mortgage-backed securities. Late on Wednesday, NovaStar Financial Inc said it lost about US$252 million due to mortgages.
Many investors are bracing for UBS AG to report a substantial writedown -- a Lehman Brothers analyst is reportedly estimating a writedown of US$7 billion to US$8 billion. However, the Swiss bank said it expects to post a fourth-quarter profit.
Earlier this week, Britain's HSBC said it would write down US$3.4 billion; Bear Stearns Cos announced a writedown of US$1.2 billion; and Bank of America reported a writedown of US$3.3 billion.
Those followed even larger estimates a few weeks ago from Citigroup Inc and Merrill Lynch & Co, which expect writedowns as much as US$11 billion and US$6 billion respectively.
Because it's so hard to know how much some investments are worth in the tight credit markets, Wall Street remains uncertain how high losses really are.
Certain accounting rules require companies to price their holdings according to the market value; when there is no market, they have to estimate.
Neri Bukspan, chief accountant for Standard & Poor's credit market services, likened the process to figuring out how much your house is worth when no one in your neighborhood can sell theirs -- a scenario many US homeowners can relate to right now.
"Some argue this is highly judgmental, that management could introduce their own bias," Bukspan said.
Furthermore, if the credit markets worsen, banks will inevitably have to write down their portfolios further.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique