Global banks have now written off more than 80% of their losses against assets linked to the US subprime mortgage market, according to a report by Fitch Ratings. Fitch estimates that total losses on subprime residential mortgage backed securities and CDOs will total about $400bn. Half the potential losses sit with banks, which have now disclosed 80% of them. The report is likely to fuel the growing sense of optimism throughout markets in recent weeks, following the rescue of Bear Stearns in mid-March. Since then, both equity and credit markets have rallied and liquidity has returned to some areas. But Fitch stressed that progress on mortgage write-offs did not mean it was calling an end to the entire crisis, as banks may still have some losses to take.
