Bank of America To Write Down Further $3 billion

by Stewart Douglas

Story link: Bank of America To Write Down Further $3 billion

The Bank of America has today announced that its exposure to the sub-prime sector was about to be realised even further with a pending write down in excess of $3 billion to reflect additional devaluations in its investment portfolio.

The Bank today further warned that there is a likelihood that its debts could continue to increase over the coming months as a result of lingering uncertainty in some of its book assets linked with sub-prime securities directly and indirectly.

However the bank did offer some reassurance by describing its exposure as ‘manageable’, despite the fact that it has been widely regarded as showing its inexperience in its investment strategy prior to the collapse leading to the current predicament.

The news is just another continuation of the ongoing problems faced by the investment banking sector in light of the sub-prime collapse. With most major investment funds across the globe holding some stake in the US sub-prime mortgage market, investment houses the world over have fallen on tough times over the last quarter, with a likelihood of continuing problems for the foreseeable future.

Additionally with the knock on effect on investor confidence, even exposure to stocks and shares on traditionally established exchanges has been more risky, and has been responsible for some of the losses realised across the board.

Speaking today on the news, bank chief executive Lloyd Blankfein suggested that the bank was unlikely to be required to take additional write downs beyond the current problems, given its intention to inject a further $600 million in capital to prop up existing, vulnerable assets.

THe news follows similar reports from other major investment firms. Under-fire Citigroup have announced their forthcoming exposure of up to $11 billion, whilst Morgan Stanley suggested it could total $6 billion. It remains to be seen whether Bank of America can maintain its debts as it presently believes, and whether it can maintain confidence in its investment division.