14 Bank and I-Bank Write-Downs

The following is a list of write-downs from major banking and investment banking institutions. The numbers are current and cover write-downs from November, 2007. The write-downs include the following: subprime mortgage loans, leveraged loan commitments and other assets.

UBS (UBS): $37.4 billion

Citigroup (C): $21.2 billion (expected further loss of $18 billion in Q1, 2008)

Merrill Lynch (MER): $19.4 billion

Morgan Stanley (MS): $12.9 billion

Deutsche Bank (DB): $7.1 billion

Bank of America (BAC): $5.7 billion

Royal Bank of Scotland (RBS): $5.6 billion

Credit Suisse (CS): $4.7 billion

Goldman Sachs (GS): $3.7 billion

Lehman Brothers (LEH): $3.3 billion

Barclays PLC (BCS): $3.3 billion

JPMorgan (JPM): $2.9 billion

Bear Stearns (BSC): $2.75 billion

HSBC Holdings (HBC): $2.1 billion

In a recent investing blog post, I wrote that we’re currently in a catch-22 type situation. I very much doubt these will be the only losses recorded, and some of the companies mentioned above haven’t even begun to re-price their assets to market value. One such example is Lehman Brothers. It has one of the largest exposures, on a percentage basis, of the types of assets that have soured over the past six months. Yet its write-downs are minuscule compared to its competitors - Merrill Lynch and Morgan Stanley. I would also mention that Bear Stearns never really came clean on its assets, but as I wrote in an earlier investing blog post, JP Morgan said that it would not have purchased Bear without the $30 billion (now $29 billion) backstop from the Federal Reserve.

What does this all mean? It means that many of these banks, and in particular the investment banks, have lots more to disclose and, in my humble opinion, would benefit from vetting it all right now and begin the rebuilding process. Of course, vetting large write-downs could cause further run-on-the-bank type situations, which Lehman and Merrill, especially, are incredibly worried about.

Comments

[helplessobs...:]

Here in Fredericksburg, Va, home prices have dropped from $350k to $275k, selling time has increased from 28 days at the peak to 138 today. Realtors report people are walking away from bad loans. Finally Fredericksburg, Va is a prosperous area with tons of govt dough for workers.

2008 Apr 14 11:06 AM

[Rajshree La...:]

Looks like that the worst is yet to come. With Goldman predicting that there are around a trillion debts in securitisation, this looks like just the tip of an ice berg..! lets see how the market moves.!!

2008 Apr 14 01:19 PM

[jimmy46:]

Here in Reno most of the houses for sale last year have sold
Prices are steady or up a little,

AND THE BUILDERS ARE STILL BUILDING NEW HOUSES

2008 Apr 14 03:43 PM

[DSX Lover:]

If you think the worst is yet to come, then give the disclosure of what you own, or short of. These article is not helping anyone make a better investment decision. 400,000 New houses in Inventory, 600K estimated 2008 sales, although I Don't believe any of those two(1.750 Million were sold in the peak year). 4 Million existing home sales on Inventory, 1 Million foreclosures last year, 1.3 estimated for these year. All the foreclosures don't add up to $1 Trillion in these estimates, and if they are repackaged at 50% discount, there's a maximum of $500 Billion in loses. I see $250 Billion in writedowns so far, so the worst is clearly over. Homebuilders inventory, has gone down considerable, and once Existing Home sales inventory drops, we can look forward. With Banks selling at 60-80 cents on Book, its the best time to go long NCC, RF, FITB, HBAN, because those Europeans monsters are full of cash, and looking to invest. Other midsize Regionals selling close to book are BBT, CMA without subprime crap.

2008 Apr 15 01:31 PM

[Ryan Freund:]

I had a short position last week in Lehman, but no longer do. I have no vested interest whatsoever in any of the companies mentioned in this article.

2008 Apr 15 02:21 PM

[Ryan Freund:]

In addition, you are only looking at residential, not commercial or auto loans. If you think these will escape the credit squeeze, you are sorely mistaken.

2008 Apr 15 02:23 PM

[phdinsuntan...:]

Ryan

is better you think again about LEH, jus look at this:
US March 31
March 31 2008 Fiscal Year 2007: Capital/Assets
US
US Broker Bear Stearns 3,0%
US Broker Morgan Stanley 3,0%
US Broker Merril Lynch 3,1%
US Broker Lehman 3,3%
US Broker Goldman Sachs 4,5%
US Bank Citigroup 5,2%
US Bank JP Morgan 7,9%
US Bank Wells Fargo 8,3%
US Bank Bank of America 8,6%
US Bank Wachovia 10,2%

2008 Apr 19 03:51 PM