Bear Stearns is expecting to write down $1.2 billion of assets linked to mortgages, despite investors fearing multi-billion dollar write-downs.
The news sent share prices in the bank up by 5% but the write down will force the investment bank to announce a loss.
Equivalent to about 9% of the bank’s market value to the end of August, the write down follows just a few months after it bailed out of two hedge funds that faced the full turmoil of the crisis.
“I wouldn’t want to predict that things couldn’t get worse, because they seem to keep surprising people,” says Sam Molinaro, chief financial officer, to City AM. He also says that Bear had marked down assets to levels that were conservative.
Morgan Stanley posted bigger write downs than Bear Stearns when it announced $3.7 billion of write downs last week but Bear Stearns has reduced its exposure to sub-prime mortgage bonds since August.