Analysts Predict More Asset Writedowns At Top Firms
And Bloomberg reports that analysts at JPMorgan estimate that UBS may writedown a further $6.3bn before tax this year, and that Deutsche May writedown $7.7bn more. The analysts said in a note this week that 'we still see challenges for the unprepared European banking sector as the structured credit crisis is spilling over into mainly traditional credit in 2009. European banks are two quarters behind the curve in restructuring compared to US peers'.
In the meantime, Reuters reports that Peter Hooper, Deutsche Bank's chief US economist, is predicting that banks will continue to experience writedowns and loans losses for the next 9 months. Hooper said on Friday that 'the worst pain will be felt over the next 6 - 9 months. It will be painful in both the US and Europe'.
The Financial Times reports that National Australia Bank has booked another $798m in losses as a result of exposure to US mortgages. The bank said that it has now set aside enough to cover around 90% of its exposure to CDOs. The newspaper also reports that ANZ, Australia's third-biggest lender, has issued a profit warning, forecasting that it will book bad debt provisions of around $1.1bn in the second-half of the year. The bank did say, however, that it had no exposure to CDOs or the US subprime lending market.
Bloomberg reports that US mutual funds firm Legg Mason has posted its second straight quarterly loss. The net loss for the period came in at $31.3m, after investors pulled some $11bn from the firm's stock funds and another $11bn from bond funds.
The Financial Times reports that, according to Chicago-based Hedge Fund Research, hedge funds were down 2.7% this month through July 23rd, and are having their worst month in 8 years after wrong-way bets against banks and in favour of rising commodity prices.
Reuters reports that WestLB's chairman Michael Breuer has told German weekly magazine Focus that his bank is 'weeks' away from finding a merger partner. Although the bank is pursuing a number of options, the most likely deal is thought to be a three-way merger with LBBW and BayernLB.
Finally, The Wall Street Journal reports that energy company SemGroup, which filed for bankruptcy protection this week after losing $2.4bn on energy contracts, had large 'short' positions on crude oil contracts. According to the newspaper, some analysts and creditors are also speculating that, given the rapid decline in the company's fortunes, the firm may also have been making speculative trades outside its core businesses.
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