European Banks Announce Large Write-Downs on Subprime Assets

European banks are beginning to reveal the extent of their exposure to the U.S. subprime mortgage market. Several institutions have announced large write-downs on their holdings of mortgage-backed securities, sparking concerns about the health of the European banking system.

Write-Down Announcements

Among the banks announcing write-downs are:

UBS: The Swiss bank announced a write-down of $4 billion related to its subprime mortgage holdings.
Deutsche Bank: Germany’s largest bank reported a loss of $2.2 billion due to similar investments.
BNP Paribas: The French bank froze three funds with exposure to U.S. mortgage debt, triggering a global market sell-off.

Impact on Markets

These announcements have rattled investors, leading to a sharp decline in European stock markets. The interbank lending market has also been affected, with banks becoming increasingly reluctant to lend to each other.

Future Outlook

The full extent of the subprime crisis on European banks is still unknown. Analysts warn that further write-downs are possible, depending on the performance of the U.S. housing market.