Bloomberg reports that Fifth Third Bancorp, Ohio’s second largest bank, “stock fell 19 percent, after slashing its dividend and forecasting much lower profit.” This is reportedly the largest decrease in at least 23 years.

“Fifth Third joins the list of banks and securities firms that have raised more than $300 billion to shore up their balance sheets after losses tied to mortgage and debt markets,” reported Bloomberg. The company stated that it will sell subsidiaries and preferred convertible stock in an effort to raise $2 billion.

A Goldman Sachs analyst said, “U.S. banks may need an additional $65 billion as losses and writedowns extend into 2009's first quarter.” Another analyst claimed “Fifth Third is particularly vulnerable because it operates in states where borrowers are having the hardest time keeping up with payments.”

Fifth Third is the last of Ohio's three largest banks to raise capital.

Here is a link to this article:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2gYPg3wFdr0&refer=home

Yameena

John Paulson recently told a group of hedge fund managers meeting in Monaco that he expects that the losses and write downs which will follow the world wide credit crunch will reach 1.3 trillion dollars. He stated that he thinks that we are about one third of the way through this financial crisis.

Quote:
Ambac Financial Group Inc., the second-biggest bond insurer, is "the most leveraged, troubled company out there," Paulson said. It is at risk of being downgraded to non-investment grade, Paulson said. Ambac spokeswoman Vandana Sharma declined to comment.

`Deteriorate Significantly'

The housing and credit-market slump pushed Ambac to three straight quarterly losses after more than a decade of profit. It has written down $5.2 billion since the collapse of the U.S. subprime mortgage market last year.

Paulson's outlook is consistent with the view of hedge funds meeting in Monaco this week. More than 80 percent of the 1,300 fund managers, investors and service providers gathered in Monaco for the annual conference said they expect the credit crisis will continue, according to a GAIM survey. About 23 percent said the situation "will deteriorate significantly."

Bill Browder, founder and head of Hermitage Capital Management, said securities firms have a "vested interest" in claiming an early end to the crunch. "If we're in the seventh or eighth inning, this is a 100-inning game," he said.

Link:
http://www.bloomberg.com/apps/news?pid=20601087&sid=alYak4riQl0c&refer=home

Michael