2008-04-14: The first quarter 2008 earnings season has begun just as fourth quarter 2007 earnings season ended, with sub-prime mortgages weighing heavily on the worlds biggest banks.
The world’s biggest banks have suffered losses and write-downs totalling almost $250 billion since the beginning of 2007, according to analysts. Last week the IMF shocked markets by saying that global losses from the credit crisis could rise to $945 billion.
Included in the upcoming carnage are Deutsche Bank, Citigroup and Merrill Lynch.
Deutsche Bank’s balance sheet is heavier on the leveraged loans side than it’s shareholder equity. As a result the bank is planning to sell on the loans to the private-equity funds at a loss to free up its balance sheet.
Citigroup’s massive exposure to American mortgages is expected to take a $10-$12 billion hit and swinging it to a first-quarter loss of almost $3 billion.
Merrill Lynch meanwhile is expected to knock another 20% off the value of its sub-prime holdings. This in addition to $18 billion of write-downs that it announced only three months ago.
