各大银行承认次级贷款问题

Banks admit to problems
Eric Dash
October 3, 2007

NEW YORK: Wall Street's banking giants have started to admit their problems, which began in the mortgage-lending business and led to a season of wild stockmarket swings.

The country's biggest bank, Citigroup, will write off $US5.9 billion ($6.6 billion) in the third quarter, causing its profit to drop 60 per cent from a year earlier. Earlier Europe's biggest bank, UBS, said it had written down $US3.4 billion in the value of mortgage-backed securities and would suffer a loss in the quarter. Other banks, including Merrill Lynch and Bank of America, have issued similar warnings.

Investors took the disclosures as a sign that the worst may be over for the banks and that any losses may be contained.

At Citigroup, the announcement again raised questions about the future of its chief executive, Charles Prince.

Still, all three major markets indexes closed higher on Monday. The Dow Jones set a record, rising 191.92 points to 14,087.55.

Analysts cautioned, however, that serious problems remained in the housing market and questioned whether consumer spending could continue to carry the broader economy.

"It's a clean-up quarter," said Michael Mayo, a financial services analyst at Deutsche Bank. "The industry cleaned up from the collapse of the technology bubble earlier this decade, from commercial real estate in the early 1990s and from Third World debt in the late 1980s.

"This quarter has the potential for a similar cleansing - only this time from private equity loans and mortgages."

Banks and brokerage firms have been contending with the twin problems of the mortgage meltdown and credit market collapse in July and August. As mortgages to home buyers with shaky credit soured, the fallout sent shock waves through the financial system. Investors lost faith in mortgage-backed bonds and other complex securities, causing prices to plummet. Demand for high-yield loans used to finance buy-out deals all but dried up, leaving banks faced with the possibility of holding billions of dollars in debt. And higher financing costs and tighter lending terms caused mortgage underwriting to grind to a halt.

Investors, including many hedge funds, suffered heavy losses. Now, Wall Street is also paying the piper. The poor results were not unexpected. In September, several brokerage firms - including Bear Stearns, Lehman Brothers, and Morgan Stanley - reported lower earnings. Only Goldman Sachs's earnings rose - and even it was not untouched by the jittery markets.

"Is it Wall Street taking its medicine?" said Brad Hintz, a financial services analyst at Sanford C Bernstein. "No question about it."

Banks are writing down the value of billions of dollars in buy-out loans, weathering heavy trading losses and setting aside hundreds of millions of dollars to protect against future losses.

But cleaning up their balance sheets only solved half the problem, Mr Hintz said. In subsequent quarters, banks are likely to generate less from advising on mergers and acquisitions as the buy-out boom slows. And they must replace the income from subprime mortgages, a market that could take years to recover.

"It is going to be very painful for the firms that have a lot of mortgage exposure and it has the broader effect on the overall economy," Mr Hintz said.

The New York Times