JPMorgan has come out and estimated that European investment banks are likely to writedown an additional $18.9bn in the fourth-quarter.
Analysts at the bank expect Deutsche Bank and Credit Agricole to writedown some $2.3bn each, whilst HSBC could writedown $2.2bn, Royal Bank of Scotland $1.3bn, UBS $1.2bn, BNP Paribas $1bn, Credit Suisse $808m and SocGen $2.6bn.
And Reuters reports that Merrill Lynch analyst Guy Moszkowski has cut his rating on JPMorgan from 'neutral' to 'underperform'. He is also now forecasting that the firm will post a fourth-quarter loss. Moszkowski said in a recent note to clients: 'While there is little doubt that JPMorgan will emerge from the current crisis in a good competitive position, it is increasingly clear that credit costs in the US will get much worse, particularly in cards and commercial lending'.
The news agency also reports that Friedman, Billings Ramsey Group analyst Paul Miller has issued a note rating Bank of America 'underperform', estimating that the bank will need to raise 'substantial' capital. He said that he believes that the firm's stock could go as low as $9-a-share (the stock closed Monday at $14.11).
Bloomberg reports that R3 Capital Management's $1.5bn hedge fund is said to have lost 31% in its first 6 months, after its assets were frozen as a result of the Lehman bankruptcy. The news agency also reports that Tremont Group Holdings' Rye Investment Management fund is said to have had around $3.3bn in the care of Bernard Madoff, and Bank Medici has confirmed that two of its funds have $2.1bn invested with him. The Financial Times also reports that Fortis has said that its exposure to Madoff could be as high as $1.4bn. Stephen Harbeck of the US Securities Investor Protection Corp. has said that it will take six months to sort out Madoff's records, which he claims are 'utterly unreliable'. No surprise there, then.
Reuters reports that Daiwa Securities has said that it may raise an additional $1.1bn in capital to beef up its investment banking unit, and Reuters reports that Mitsubishi UFJ Financial has confirmed it will acquire Citigroup's Japanese trust bank in a deal thought to be worth around $276m.
Finally, Bloomberg reports that, according to analysts at CLSA Asia-Pacific Markets, HSBC may have to come to the well to raise an additional $14bn in capital due to increasing bad debt provisions.
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