NEW YORK, Nov 13: Global banks are likely to be hit with hefty losses of up to $400 billion stemming from mortgage investments that have soured in the US housing slump, according to an industry report.
Analysts at Deutsche Bank estimate the banking industry’s losses could swell to as much as $400 billion as major banks continue to write-off stricken multibillion dollar investments in mortgage-backed securities.
In a report obtained on Tuesday, Deutsche Bank analyst Mike Mayo forecast the losses could range between $300 and $400bn.
Mortgage-related securities were a hot commodity on Wall Street during the years-long housing boom, but the securities lost their lusted this year amid a prolonged housing downturn dating to early 2006.
Citigroup, the world’s biggest financial firm, and Merrill Lynch ousted their respective chief executives in recent weeks after disclosing large write-offs related to mortgage-backed securities and other complex investments.
Citigroup warned on November 5 that it will likely have to write-off a further eight to $11 billion, largely because of distressed mortgage-related investments. The bank announced the departure of chief executive Charles Prince the same day.—AFP
