Subprime woes continue in first quarter

LOSSES & LAWSUITS

LONDON & NEW YORK - UBS announced this April that its total subprime writedowns are set to double to around $37 billion. Freshly announced writedowns of $19 billion will cause an estimated first-quarter loss of over $12 billion for the Swiss bank - the worst hit by the credit crunch. Deutsche Bank, meanwhile, anticipates a first-quarter writedown of $3.9 billion, after reporting a 48% fall in profit for the last quarter of 2007. JP Morgan has also slumped to report its first quarterly net loss in over four years after a $2.6 billion first-quarter writedown on its mortgage-related, collateralised debt obligations and other lending products.

UBS has announced that its chairman and chief executive will soon be departing. But this is a drop in the ocean compared with the job cuts being made across the banks. Citi's markets and banking unit is facing 1,300 job cuts, in addition to those sustained already, after it posted a $5.7 billion loss for the first quarter. That is on top of the $11 billion of losses posted by the same division in the fourth quarter of 2007. Overall, the bank says it will make fresh job cuts of 9,000, after the 15,000 it announced last year, and has posted a $5.1 billion Q1 net loss, after Q4 2007 losses of $9.8 billion.

One survey by the centre for economics and business research (CEBR) warns London could lose 20,000 city jobs, making the employment downturn worse than that experienced during the dotcom crash. JP Morgan analysts have suggested up to 40,000 will lose their jobs. CEBR says financial sector jobs in London will decrease by 11,000 in 2008 and over 8,000 in 2009, with job levels not expected to recover until 2012.

CRUNCH LOSSES:

UBS: $37.4 billion

Citi: $18 billion

Merrill Lynch: $14.1billion

Morgan Stanley: $9.4 billion

Deutsche Bank: $7.1 billion

Bank of America: $5.3 billion

HSBC: $3.4 billion

Bear Stearns: $3.2 billion

JP Morgan: $3.2 billion

BayernLB: $3.2 billion

Barclays: $2.6 billion

IKB: $2.6 billion

Royal Bank of Scotland: $2.6 billion

Credit Suisse: $2 billion

Source: BBC News.

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