Deutsche writes down 2.7bn euros

Deutsche Bank has written down another $3.6bn (£1.8bn) between April and June, taking its bill from the credit crunch to more than $11bn.

Unlike many of its global rivals, Deutsche Bank did still manage to make a profit in the quarter.

Pre-tax profits came in at 642m euros (£506m), well down on the 2.7bn euros it made in the same period last year.

Almost half of the write-downs came from investments in debt backed by residential mortgages.

Exposure to monoline insurers, which insure bonds, as well as poor investments in commercial property, made up much of the rest of the write-downs.

"We remain cautious for the remainder of 2008," said chief executive Josef Ackermann.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/7534487.stm

Published: 2008/07/31 06:55:56 GMT

Merrill Lynch posts loss of US$4.89b, sheds assets

NEW YORK - Wall Street investment giant Merrill Lynch on Thursday announced a quarterly net loss of US$4.89 billion, driven by hefty write-downs from its bets on the US real estate market.

Merrill, which has been roiled by its exposure to the US sub-prime mortgage crisis, also said it would shore up its capital with the sale of some assets.

It announced the sale of its 20 per cent stake in financial news and data group Bloomberg for US$4.43 billion.

Merrill said it 'is also in negotiations' to sell a controlling interest in Financial Data Services for at least US$3.5 billion.

Merrill was forced to write down over US$9 billion in soured investments, largely linked to bets on US mortgage investments that have been hit by a horrific housing slump after years of sizzling growth.

'Our core franchise continues to perform well despite the extremely challenging market environment,' said John Thain, chairman and chief executive who took the reins in December at the storied Wall Street firm pummelled by massive credit losses linked to the US housing downturn.

'Against this backdrop, we increased our excess liquidity pool to a record level of US$92 billion and significantly reduced our exposures in key asset classes. Importantly, with the transactions we announced today, we are bolstering our capital base and continue to move forward on our risk management and strategic growth initiatives.'

As part of its reorganisation, Merrill indicated that some 4,200 jobs had been cut so far this year, a bit more than the 4,000 anticipated. The cuts required a charge of US$445 million.

The loss for Merrill amounted to US$4.97 per share, far more than the consensus forecast of a loss of US$1.91 a share.

Standard & Poor's maintained its ratings on Merrill Lynch with a 'negative' outlook, suggesting most of the worst for the investment firm has been disclosed.

The write-offs 'were greater than we had previously anticipated, pointing up the severe pressures that continue to weigh on the mortgage markets,' said S&P analyst Scott Sprinzen.

'However, with Merrill Lynch having been downgraded on June 2 ... we believe there is sufficient leeway in the current rating to sustain this disappointment, albeit that leeway is now diminished.'

The rating 'takes account of the likelihood of further weak financial performance during the next few quarters, with potential additional write-downs overshadowing underlying operating results,' S&P said. -- AFP

UBS, Credit Suisse may have to put aside more capital

(GENEVA) Swiss banks UBS and Credit Suisse would have to set aside 70 billion Swiss francs (S$93.1 billion) more in company capital as Switzerland's banking watchdog moves to prevent a repeat of the sub-prime crisis, a Swiss newspaper reported yesterday.

Sonntag quoted parliamentarian Hans Kaufmann saying that the Federal Banking Commission would require additional provisions of '40 billion francs for UBS and 30 billion francs for Credit Suisse'.

Banking commission spokesman Alain Bichsel confirmed that a sum had been proposed and that the banks have until the end of summer to put forward their positions. 'We will issue the definitive provision in autumn,' he told the newspaper.

Both banks have been hard-hit by the US sub-prime mortgage crisis, with UBS writing down over US$37 billion in assets and Credit Suisse with around 10 billion Swiss francs in writedowns since the onset of the crisis.

Philipp Hildebrand, who is vice-chairman of the Swiss central bank's governing board, said last month that a higher capital requirement was needed.

He also suggested the introduction of a so-called leverage ratio which would put a limit on leverage to stop banks from overleveraging their assets.

Meanwhile, another newspaper Sonntagszeitung said yesterday that the commission had sent its proposed new regulations to the banks last week.

But Credit Suisse has already warned against these new measures. Bank spokesman Alex Biscaro told Sonntagszeitung that 'measures must be targeted at the actual problems'. -- AFP

J.P. Morgan reportedly to complete European jobs cuts in Q3

Last update: 2:39 a.m. EDT July 4, 2008

By Sarah Turner

LONDON (MarketWatch) -- J.P. Morgan is expected to cut up to 10% of its European investment banking staff by the end of the third quarter, the Financial Times reported on Friday. Staff reductions have been taking place in mergers and acquisitions and equity and debt capital markets businesses, especially at vice-president level, the paper reported, citing people familiar with the process. The jobs cuts started several months ago, the paper said.

Citi sees more UBS writedowns

(ZURICH) UBS may post US$6.9 billion of additional writedowns and seek to raise more capital, Citigroup Inc said yesterday after UBS chairman, Peter Kurer told Swiss newspaper Finanz & Wirtschaft on Wednesday that the Swiss bank will not need more funds.

The Zurich-based company, which wrote down US$38 billion over the past three quarters, still carries US$83 billion of 'risk exposures that are likely to require further markdowns', London-based Citigroup analyst Jeremy Sigee said in a note yesterday.

Mr Sigee, who rates UBS a 'hold' with a 'high risk' caveat, estimates that the company may post a loss of 4.5 billion Swiss francs (S$6 billion), and announce writedowns of as much as seven billion francs when it reports earnings on Aug 12.

He blamed a slump in financial markets for asset price declines, and said that UBS may need to raise more capital, either from asset sales or from shareholders.

Banks and securities firms have turned to investors for US$322 billion to replenish reserves after US$403 billion of writedowns and credit losses, tied to the collapse of the US sub-prime mortgage market. UBS trails only Citigroup in credit losses and capital raising after turning to investors for US$29.5 billion since the credit crisis started a year ago.

Speculation that financial firms would need more funds helped drive an index of European banking shares down 8.3 per cent in the previous five days. UBS has fallen 56 per cent this year. -- Bloomberg