Deutsche Bank Highlights Bank Securities Losses Due to Nonagency MBS
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Deutsche Bank noted that Wells Fargo (NYSE: WFC) showed that unrealized securities losses increased to $2.1B from in the recent quarter, which is up from $0.6B due to wider MBS spreads. Deutsche said, "while MBS prices have held up, nonagency MBS (1/3rd of the MBS market) declined by anywhere from 10%-40%."
Deutsche said that since 1992, the percentage of bank securities held in treasuries went from $32% down to 1%, with the difference going to MBS. The firm said bank MBS assets now total about $1 trillion, of which $265 billion in nonagency. They said this implies incremental losses at banks vs. 1Q08 of $40B or so, or about 3% of the industry's equity.
Deutsche said this is something to watch for at the other banks as they report.
Other bank stocks:
Bank of America (NYSE: BAC), Citigroup Inc. (NYSE: C), Washington Mutual Inc. (NYSE: WM), JPMorgan (NYSE: JPM), KeyCorp (NYSE: KEY), SunTrust (NYSE: STI), Wachovia (NYSE: WB), Fifth Third (Nasdaq: FITB).
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