Subprime crisis "worse than 1998", says S&P

In a study released this week, the agency's credit analyst, Nick Hill, wrote that a "harsh but plausible stress test" predicted 47% drops in investment banking and trading revenues for the largest banks. "This is more severe than in 1998, reflecting in particular potential mark-downs on leveraged finance exposures and structured credit," he wrote.

The losses would be "testing but manageable" on the whole, but some firms could suffer significantly, and could be downgraded if their risk management was judged inadequate. Hill added that the firm considered an extended downturn unlikely.

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