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.
Below is a chronological list of all the Bloomberg writedown estimates since December 2007, rising from $100 to now $500 billion — truly breathtaking.
2007 12 27 Subprime Bank Losses Reach $97 Billion, Led by Citigroup: Table
2008 01 22 Subprime Bank Losses Reach $133 Billion, Led by Merrill: Table
2008 01 31 Subprime Bank Losses Reach $146 Billion as Europe Joins: Table
2008 02 22 Subprime Losses Reach $163 Billion With Asian Banks
2008 02 29 Subprime Losses Reach $181 Billion With European Banks: Table
2008 03 07 Subprime Losses Reach $188 Billion With Canada, Europe: Table
2008 03 14 Subprime Losses Reach $195 Billion; German Banks Get Hit: Table
2008 03 26 Subprime Losses Exceed $208 Billion With U.S. Writedowns: Table
2008 04 01 Subprime Losses Reach $232 Billion With UBS, Deutsche: Table
2008 04 10 Subprime Bank Losses Reach $245 Billion With WaMu, HSH: Table
2008 04 28 Subprime Bank Losses Reach $312 Billion With RBS, Nomura: Table
2008 05 09 Subprime Bank Losses Top $323 Billion With HBOS, Lloyds: Table
2008 05 19 Subprime Losses Top $379 Billion on Balance-Sheet Marks: Table
2008 06 18 Subprime Losses Top $396 Billion on Brokers’ Writedowns: Table
2008 07 02 Reference within article: Writedowns have topped $403 Billion
2008 07 15 Reference within article: Writedowns reach $415 Billion
2008 07 22 Reference within article: Writedowns reach $462 Billion
2008 07 23 Reference within article: Writedowns reach $467 Billion
2008 07 30 Reference within article: Writedowns reach $474 Billion
2008 07 31 Reference within article: Writedowns reach $476 Billion
2008 08 07 Reference within article: Writedowns reach $493 Billion
2008 08 08 Reference within article: Writedowns reach $497 Billion
See my credit crisis timeline for a rundown on all the writedown news since the credit crisis began a year ago.