Factbox: US and European banks could lose over $5 billion on risky buyout loans

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NEW YORK, Aug 17 (Reuters) – Big US and European banks are facing tougher times in the riskiest parts of the credit market.

The largest U.S. lenders, including Bank of America (BAC.N) and Citigroup (CN), wrote down $1 billion on leveraged and bridge loans in the second quarter as rising interest rates made it harder for banks to borrow Turn off investors and other lenders.

Below is a compilation of write-downs taken by global banks in the second quarter:

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BANK OF AMERICA

Bank of America said it suffered mark-to-market losses related to leveraged finance positions in the second quarter.

Chief Financial Officer Alastair Borthwick said the market turmoil and abrupt slowdown in the second quarter had triggered a downturn in leveraged finance markets, causing a number of deals to be downgraded.

CITI GROUP

Citigroup Inc (CN) wrote off $126 million in the second quarter.

CFO Mark Mason said leveraged finance is under significant pressure but noted that Citigroup is not a big player in the market.

WELLS FARGO

Wells Fargo & Co (WFC.N) took a $107 million write-down due to widening credit spreads.

CREDIT SUISSE

Credit Suisse said it suffered mark-to-market losses of 235 million Swiss francs ($247.45 million) in leveraged finance.

JP MORGAN

JPMorgan took a $257 million haircut on its bridge loan book.

“I think we made conscious decisions here to reduce our risk appetite and took some stock losses in leveraged finance,” said CFO Jeremy Barnum.

GERMAN

Deutsche Bank also took a hit on its leveraged loan book when the prospects for deals turned sour amid rising interest rates and extreme market volatility caused by the Russian invasion of Ukraine.

Deutsche took a write-down of 150 million euros in the quarter. Continue reading

BARCLAYS

Barclays has noted some leveraged finance transactions in managing its deal pipeline, said Anna Cross, the bank’s finance director.

($1 = 0.9497 Swiss Francs)

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Reporting by Saeed Azhar; Edited by Richard Chang

Our standards: The Thomson Reuters Trust Principles.

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