UBS, Citigroup and Merrill Lynch can lose 10 billion dollars more
15 June 2008American banks Merrill Lynch and Citigroup, and also European UBS can suffer losses at the rate of 10 billion dollars because bonds insurers have lost the maximum ratings in the USA. Earlier because of securities insurers problems three banks have already lost the similar sum, however, analysts consider, that in a context of the general losses of banks because of credit crisis the sum of new write-offs does not look such high.
According to analysts’ estimation three banks already have written off as 10 billion dollars because of problems of bonds’ insurers. Now they expect for with doubling the sum of write-offs. In the end of the last week rating agency Standard and Poor’s has reduced ratings of two largest American bonds’ insurers MBIA and Ambac from the highest up to AA, having predicted decrease in rates of new business and financial flexibility growth. As a result ratings of insured securities for the sum from above 1 billion dollars will go under revision. Even earlier MBIA and Ambac have lost the highest ratings of agency Fitch. Agency Moody’s also thinks about the same step.
The limited potential of insurers’ profits creates risk of cost of insurances and guarantees under the hypothec securities, given to banks and the broker companies. The general losses of banks can reach 40 billion dollars. The greatest risk of new write-offs has hung above bank UBS - the largest European victim of credit crisis. On the end of March the size of potential losses of bank has been estimated in 6,3 billion dollars. While in Citigroup the volume of the positions, guaranteed by insurers, made 4,8 billion dollars. In Merrill Lynch this parameter has made 3 billion dollars.
