naked capitalism

This Bloomberg piece, “Banks’ Subprime Losses Top $500 Billion on Writedowns” has some sloppy writing, but I am featuring it nevertheless because it presents some useful data and its headline factoid will no doubt be misconstrued.

The headline refers to subprime when in fact the article tallies total creidt crund losses and writedowns, not just subprime. It then compares that figure to other estimates of expected “losses” from the credit crisis. Similarly, other computations have focused on writedowns.

The problem is that at least some of those estimates were simply for writedowns, not for operational losses. For instance, the Bridewater paper, which estimated the total damage at $1.6 trillion, used a mark-to-market approach, which means it did not include losses from current business activities. Similarly, the IMF estimate, which the story also cites, was for losses to all financial players (including, for instance, hedge funds) again making for an apples and oranges comparison.

The approach used in the Bloomberg piece yields a more dramatic number, but also gives the impression we are further along with the financial mess than we may in fact be. However, the article usefully compares the damage to the firms’s equity bases versus the new funds raised to date, revealing a nearly $150 billion shortfall. Ouch.

From Bloomberg:

Banks’ losses from the U.S. subprime crisis and the ensuing credit crunch crossed the $500 billion mark as writedowns spread to more asset types.

The writedowns and credit losses at more than 100 of the world’s biggest banks and securities firms rose after UBS AG reported second-quarter earnings today, which included $6 billion of charges on subprime-related assets.

The International Monetary Fund in an April report estimated banks’ losses at $510 billion, about half its forecast of $1 trillion for all companies. Predictions have crept up since then, with New York University economist Nouriel Roubini predicting losses to reach $2 trillion….

Firm Writedown & Loss Capital Raised

Citigroup 55.1 49.1

Merrill Lynch 51.8 29.9

UBS 44.2 28.3

HSBC 27.4 3.9

Wachovia 22.5 11

Bank of America 21.2 20.7

IKB Deutsche 15.3 12.6

Royal Bank of Scotland 14.9 24.3

Washington Mutual 14.8 12.1

Morgan Stanley 14.4 5.6

JPMorgan Chase 14.3 7.9

Deutsche Bank 10.8 3.2

Credit Suisse 10.5 2.7

Wells Fargo 10 4.1

Barclays 9.1 18.6

Lehman Brothers 8.2 13.9

Credit Agricole 8 8.8

Fortis 7.4 7.2

HBOS 7.1 7.6

Societe Generale 6.8 9.8

Bayerische Landesbank 6.4 -

Canadian Imperial (CIBC) 6.3 2.8

Mizuho Financial Group 5.9 -

ING Groep 5.8 4.8

National City 5.4 8.9

Lloyds TSB 5 4.9

IndyMac 4.9 -

WestLB 4.7 7.5

Dresdner 4.1 -

BNP Paribas 4 -

LB Baden-Wuerttemberg 3.8 -

Goldman Sachs 3.8 0.6

E*Trade 3.6 2.4

Nomura Holdings 3.3 1.1

Natixis 3.3 6.7

Bear Stearns 3.2 -

HSH Nordbank 2.8 1.9

Landesbank Sachsen 2.6 -

UniCredit 2.6 -

Commerzbank 2.4 -

ABN Amro 2.3 -

DZ Bank 2 -

Bank of China 2 -

Fifth Third 1.9 2.6

Rabobank 1.7 -

Bank Hapoalim 1.7 2.4

Mitsubishi UFJ 1.6 1.5

Royal Bank of Canada 1.5 -

Marshall & Ilsley 1.4 -

Alliance & Leicester 1.4 -

U.S. Bancorp 1.3 -

Dexia 1.2 -

Caisse d’Epargne 1.2 -

Keycorp 1.2 1.7

Sovereign Bancorp 1 1.9

Hypo Real Estate 1 -

Gulf International 1 1

Sumitomo Mitsui 0.9 4.9

Sumitomo Trust 0.7 1

DBS Group 0.2 1.1

Other European banks* 7.2 2.3

Other Asian banks* 4.6 7.8

Other U.S. banks* 2.9 1.9

Other Canadian banks* 1.8 -
____ ____

TOTAL** 501.1 352.9

* Please see WDCI Help pages for a list of companies included in
“Other” categories for Europe, Asia, U.S. and Canada.

** Total reflects figures before rounding. Some company names
have been abbreviated for space.

Apologies for not making a snapshot of the table, but it would have been teeny even when clicked upon.