Saturday, January 26, 2008

Banks 'face a further $300bn sub-prime hit'

By Philip Aldrick
Last Updated: 11:03am GMT 25/01/2008

The world's financial institutions will have to write down a further $300bn (£152bn) of US sub-prime losses before the crisis is over, according to a study by consulting firm Oliver Wyman.

"We expect a stormy 2008," Oliver Wyman said in its State of the Financial Services Industry report.

"While governments, central banks and regulators scramble to address the aftermath of the sub-prime fallout, several other crises are mounting."

Tumbling property prices - especially in the UK and Spain - a weakening dollar, a possible collapse in commodity prices, and a fall in Chinese and Indian stocks will "disrupt" the global economy, the report claimed.

Banks are already coming off one of the worst trading periods in memory, with shares across the industry plummeting 40pc in the past six months.

Oliver Wyman has estimated that financial services companies have already taken a $300bn hit on their sub-prime exposure.

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