Bank write-downs are expected to total approximately $37.4 billion for 1Q08, according to a research note from Meredith Whitney at Oppenheimer & Co.
The bulk of the write-downs would occur at Citigroup, which is expected to take a loss of $13.1 billion overall with $9 billion in CDO exposure, $1.97 billion in CMBS and $2.2 billion in leveraged loans.
UBS is not far behind with an expected $11.1 billion write downs, spread amongst $6.9 billion in CDO exposure, $354.6 million in CMBS, $3.2 billion in Alt-A and $650 million in leveraged loan exposure.
Merrill Lynch and Bank of America may write off $4.5 billion and $4.3 billion, respectively. JPMorgan is expected to take a $2.8 billion hit and Wachovia is expected to write down $1.5 billion.
Overall, CDO write-downs are the bulk of the losses for this quarter, totaling $20.9 billion. These loss expectations were approximately 84% of a reduction from Whitney's 1Q08 estimates for U.S. banks. The cuts are related to declines in the ABX indices, LCDX index and widening CMBX spreads which mean increased writedowns, Whitney said.
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