JP Morgan and Bank of America to report losses

Source: Exec Digital USA

Date :10/8/2007 3:50:32 AM

JPMorgan Chase& Co and Bank of America the biggest arrangers of U.S. leveraged loans, are expected to report losses of about $3 billion when they report earnings this month.

According to Howard Mason, analyst with Sanford C. Bernstein & Co., JPMorgan may have to write down holdings by about $2 billion, and Bank of America's markdown may be about $1 billion.

JPMorgan is likely to report mark-to-market losses on leveraged loans of about $1.4 billion and an additional $700 million in write-downs of mortgages and mortgage-backed securities.

Bank of America may report a $700 million decline in the value of leveraged loan commitments and mortgage write-downs of $300 million, the analysts said.

Losses

The losses by the banks were the result of credit crunch of the last few months that has driven down the values of mortgage and loan-related securities.

Other banks have already taken losses on the value of their holdings in mortgage-backed securities and leveraged loans.

Citigroup, the biggest U.S. bank, took a pretax write-down of $1.4 billion as of the end of the third quarter.

Unlike Citigroup, JPMorgan and Bank of America aren't likely to substantially boost their reserves for potential losses on credit cards and other consumer loans, the Bernstein analysts said.

Citigroup increased its reserves by $2 billion, compared with expected build-ups of $200 million at JPMorgan and $100 million at Bank of America, the analysts said.

October 8 2007

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