WRITEDOWNS among the world's financial institutions won't match "Himalaya-like guestimates" and will slow in the second and third quarters of this year, according to Lehman Brothers.
Financial firms have written down about US$300 billion to date and will likely announce another US$100 billion in writedowns by the year's end, Lehman Brothers' analysts wrote yesterday in a research note obtained by Bloomberg News.
Cash infusions worth about US$182 billion have limited the capital decline across the sector, the note said.
"Himalaya-like guestimates, ranging from US$600 billion to an Everest US$1.2 trillion, seem highly improbable," analysts led by New York-based Jack Malvey wrote in the note.
Lehman's estimate is lower than that offered by UBS AG in February, which said global losses and writedowns will probably rise to US$600 billion amid a credit crunch sparked by last summer's collapse in the United States subprime mortgage market. Banks have sought to raise new capital by selling units and equity stakes to ease their cash shortage.
"Capital destruction at financial institutions has been partially offset by new equity infusions," the analysts wrote. "Subsequent quarters likely will see continued writeoffs at a slackening pace."
Citigroup Inc and Merrill Lynch & Co are among some of the institutions who've sought capital infusions, the Lehman Brothers' note said.
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