CNBC reports that TowerGroup reserch director Ralph Silva told its 'Squawk Box Europe' that 'there is insufficient margin in the banking industry to sustain the number of banks we have. We need to see at least one third of the banks around the world disappear'.

And more gloomy news from The Daily Telegraph, which reports that, according to research from the Hay Group and UK 'think-tank' the Centre for Economic and Business Studies, over 100,000 jobs will be lost in banking and financial services in the City in the coming year.

Bloomberg reports that the US government has now injected $85bn in order to bail-out insurer AIG. In exchange for the huge federal loan, AIG will give up a 79.9% stake in its business to the government. The move has been widely supported by the markets.

The news agency also reports that Credit Suisse has settled US state and regulatory probes by agreeing to buy back some $550m of auction-rate securities from clients.

Goldman Sachs posted a 70% fall in its third-quarter earnings Tuesday. Net income came in at $845m (down from $2.85bn in the same period last year), after lower than expected revenues and $1.1bn in asset writedowns. The principal investments group also lost $453m in the quarter.

Market Watch reports that Macquarie Group has denied reports that it may have trouble refinancing some of its debt, saying that it remains well-funded and well-capitalized. The bank's shares have been falling in recent days, and are now down some 55% in 2008.

Reuters reports that Morgan Stanley reported its third-quarter earnings a day early Tuesday, in order to quell 'rumor and fear' (the firm's stock had fallen 23% on Monday and Tuesday). Net income fell just 3% to an impressive $1.43bn. Firm CFO Colm Kelleher confirmed that Morgan Stanley had sufficient capital, and had sharply reduced its appetite for risk. He told analysts: 'Things are, quite frankly, getting out of hand, and ridiculous rumours are being repeated, some of which if I wrote down today and reread tomorrow, I'd probably think I was dreaming'.

Bloomberg reports that French bank Societe Generale has confirmed that its counterparty exposure to Lehman Brothers is $567m, in addition to around $107m in senior Lehman debt.

UBS shares fell another 15% in trading Tuesday, but CEO Marcel Rohner confirmed in a TV interview with Switzerland's SF1 that his bank is strong enough to weather the current market crisis. The bank also said Tuesday that closing out its exposure to Lehman would not exceed $300m.

The Wall Street Journal reports that WestLB has confirmed that it has no credit lines to Lehman, and that its exposure with regard to derivative products is in the low single digit million euro field. The bank says it has no unsecured exposure in either bonds or structured paper.

Finally, Reuters reports that, according to a report in German daily newspaper Frankfurter Allgmeine Zeitung, German state lender KfW had been busy reducing its exposure to Lehman, but somehow managed to executed an erroneous swap payment on Monday (the day Lehman filed for bankruptcy), transferring some $425.8m. An internal review is said to be underway to establish exactly how this happened. Nice.

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

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: A Valentine's Preparation Guide >>

TODAY

• Executive Compensation - See What Your Boss Got (Updated)
• John Thain's Back! / 'UBS Was A Catastrophe'
• BofA Board Thought They Were Buying Lehman!

THIS WEEK

• Help Save Macquarie Banker's Job - Join Our Campaign
• Oops - Naughty Trader Caught Red-Handed On Live TV
• 'Save Dave' Campaign Goes Global As Macquarie Investigates 'Set-Up'