U.S., European banks could lose over $5bn from risky buyout loans

Aug 18, 2022 | News

Major U.S. and European banks are facing tougher times in the riskiest parts of the loan market.

The biggest U.S. lenders, including Bank of America and Citigroup, wrote down $1bn in the second quarter on leveraged and bridge loans as rising interest rates made it tougher for banks to offload debt to investors and other lenders.

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Below is a compilation of write-downs that global banks took during the second quarter:

BANK OF AMERICA

Bank of America said it took 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 sparked a downturn in leveraged finance markets, causing a number of deals to get marked down.

CITIGROUP

Citigroup Inc wrote down $126 million in the second quarter.

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

WELLS FARGO

Wells Fargo & Co took a $107 million write-down due to a widening of credit spreads.

CREDIT SUISSE

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

Source: Reuters

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