Sub-prime losses could total $400 billion worldwide, according to analysts at Deutsche Bank AG.
US banks Citigroup, Merrill Lynch and Morgan Stanley have been hit the hardest with over $40 billion of writedowns.
Analysts are predicting that the market is not yet near to reaching the end of the crisis. “There are more losses to be taken and there’s more negative news to come. At some point it will be a buying opportunity but we’re not there yet,” says Mondher Bettaieb-Loriot from Swisscanto Asset Management in Zurich.
Mike Mayo, analyst at Deutsche Bank, expects writedowns at HSBC, UBS AG, Royal Bank of Scotland (RBS), and Barclays to reach about $5 billion each. Reported by Bloomberg, Mayo says that borrowers on sub-prime mortgages are likely to default on 30 to 40% of their debts.
He estimates that bankers will have to write off about $70 billion this year and the news comes before Deutsche Bank’s conference on sub-prime debt.