Citigroup, Swiss Banks point to big losses

But former U.S. Federal Reserve Chairman Alan Greenspan detected a glimmer of hope.

UBS unveiled $3.4 billion in losses, mainly on securities linked to the U.S. subprime mortgage sector, ousted senior managers and slashed jobs, while Credit Suisse said it would be "adversely impacted" by the market turmoil but would remain profitable in the third quarter.

Citigroup, the largest U.S. bank by market value, said it would post a decline of about 60 percent in third-quarter net income on turmoil in the subprime and leveraged loan markets as well as weakness in its consumer business.

European credit spreads widened as the losses underlined concerns about tight credit markets after short-term lending rates jumped on Friday, dashing hopes from earlier last week that credit conditions were easing.

"It definitely fuels ongoing worries on the markets. Credit spreads are widening again and the interbank (lending) market remains very tense," said Valerie Plagnol, chief strategist at CM-CIC Securities in Paris.

London interbank offered rates for three-month euro deposits extended recent gains to a new six-year high.

In a speech at the Reuters headquarters in London, Greenspan said the market upheaval stemming from defaults on U.S. home loans to people with poor credit histories "was an accident waiting to happen".

But he noted that U.S. high-yield bond issuance had started to take off again. "Is this August/September credit crisis about to be over? Possibly," he said.

UBS, the world's largest wealth manager, said the 4 billion Swiss francs ($3.42 billion) write-down would result in a third-quarter loss of as much as 800 million Swiss francs ($683 million).