The Daily Telegraph reports that US hedge fund Bridgewater Associates has warned clients that bank losses from the credit crisis could top $1.6 trillion, the highest estimate of losses so far.

The International Herald Tribune reports that the smart money is now thinking that the worst of the current credit woes are not over. The newspaper quotes Florian Esterer, a fund manager with Swisscanto Asset Management in Zurich, who said: 'Across the board, there are probably more writedowns to come...I think there is much more pain to come than they (the banks) are telling you'. And joining the chorus is JPMorgan Chase CEO Jamie Dimon, who said Tuesday: 'I do think we have some very serious issues to face'.

Also joining the bandwagon on the subject of Merrill Lynch's likely Q2 writedowns, is Wachovia analyst Douglas Sipkin. Reuters reports that Sipkin has now said that Merrill may writedown $5bn in assets, and could need a further capital injection. Citi analyst Prashant Bhatia now puts the firm's second-quarter writedown figure nearer to $6bn.

The New York Times reports that shares in BlackRock have fallen over the last few days on speculation that Merrill is to sell some of its 49% stake in the money manager.

FT Alphaville reports that shares in Royal Bank of Scotland (RBS) fell Monday, after Cazenove downgraded the bank on credit exposure concerns and uncertainties about the impact of the ABN AMRO purchase on its balance sheet. The Cazenove note estimates: 'ABN represents one third of the balance sheet of RBS, yet it will add just 1% to Earnings per Share by 2010' year-end.

Bloomberg reports that, according to data compiled by Hedge Fund Research, hedge funds declined by 0.7% on average in the first half of 2008, putting in the worst performance in this period since records began in 1990.

Finally, some good news. UBS Investment Bank is beefing up its Middle East presence. A spokesperson for the bank told Dow Jones Newswires that the firm currently has around 100 bankers in the region. He continued: 'We would anticipate going up to about 150 by the end of 2008, and can quite easily see that doubling over the next 12 to 18 months'.

Please use the 'E-Mail' button immediately under the article title to send this item to a friend.

Press here to comment on this story >>

Today in Life: Sick City >>

TODAY

• Top Firm Accused Of Bringing Down Lehman
• 'Their Staff...Were Making A Lot More (Than Ours). That Won't Last'
• The So-Called 'Greedy' Lehman Bonus E-Mail

THIS WEEK

• 'My Firm Will Never Fire Me. I'm Untouchable!'
• Top Firm Accused Of Bringing Down Lehman
• 'Their Staff...Were Making A Lot More (Than Ours). That Won't Last'