The top 50 U.S.-based bank holding companies, which represent three fourths of all assets at such companies reported a aggregate loss of $67 billion in 2008, a Fed official testified on Wednesday.
The loss was reported to Washington lawmakers today by Federal Reserve Gov. Elizabeth Duke at a meeting of the Committee on Financial Services, which is chaired by Rep. Barney Frank.
The top five bank holding companies at the end of 2008 were JPMorgan Chase & Co., Citigroup, Inc, Bank of America Corp., Wells Fargo & Co., and HSBC North America Holdings, Inc.
“Commercial banks posted a substantial and rare aggregate loss for fourth quarter of 2008, the first time this has happened since the late 1980s,” Duke said in prepared remarks released today by the Federal Reserve.
“This loss in large part reflected write-downs on trading assets, high goodwill impairment charges, and, most significantly, increased loan-loss provisions taken in response to deteriorating asset quality, higher net charge-offs, and weakening economic conditions,” she said.
The fourth quarter saw an aggregate loss of $42.7 billion, while the third quarter showed a $25.5 billion loss.
More than 4.5 percent of total loans were delinquent 30 days or more or on nonaccrual status, the highest level since the early 1990s, she said.
Almost 2 percent of all loans were nonaccruing loans, the most likely to result in additional charge-offs, she said. It was a ratio more than double that of year-end 2007.
Capital at banks was bolstered by “substantial” private capital investments in the first half of the year, with additional government capital investments coming toward the end of the year through the Troubled Assets Relief Program (TARP), she said.
Regulatory capital ratios were well in excess of minimum regulatory requirements, while Tier 1 and total risk-based capital ratios increased over the course of the year.