After RBS’s writedowns on Friday, Bloomberg estimated that we have had nearly $500 billion in writedowns in the so-called ’sub-prime’ crisis to date.
Barclays, Britain’s third-biggest bank, had first-half writedowns of 2.8 billion pounds, it reported yesterday. Its net income declined a less-than-estimated 34 percent to 1.72 billion pounds in the first six months of the year. Banks and brokerages have posted $497 billion in losses and raised $357 billion in capital since the credit crunch started.
-Bloomberg News, 8 Aug 2008
The capital raising deficit leaves financial institutions collectively with $140 billion less capital than when this crisis occurred, meaning that it has been difficult for them to de-leverage because they have had to write down so much capital. Through June, Bloomberg kept a running list of writedowns and capital raised by global financial institutions.
The biggest writedown losers have been UBS, Merrill Lynch and Citigroup, all having written down well over $40 billion each.
Since Bloomberg’s June 18th table, banks have written down an additional $99 billion and raised an additional $55 billion in capital. As a result they have had to resort to asset sales to make up the shortfall in capital. This $44 billion shortfall of capital and the asset sales suggest that capital raising is becoming increasingly difficult as this crisis continues and an increasing number of undercapitalised firms could come under pressure if they report more losses. More
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