It seems likely that losses from monoline exposure could impact second quarter earnings by nearly $10 billion, nearly doubly the previous loss amount. The hardest hit among financial companies will likely be Citigroup (NYSE: C), Merrill Lynch (NYSE: MER), and UBS (NYSE: UBS). Such is the latest from Meredith Whitney from Oppenheimer. It is likely that Citigroup will post another loss, perhaps has high as $.50 per share, compared to previously expected quarter in the black.
Finally. Standard & Poor’s downgraded monoline bond insurers MBIA (NYSE: MBI) and Ambac (NYSE: ABK) to AA from AAA on June 5. This seemingly went over as a nonevent on Wall St. yesterday and one has to wonder - Moody’s (NYSE: MCO) what are you waiting for now? The credibility of these ratings agencies is all be kaput. This will affect around $1 trillion in bonds.
Canadian Imperial Bank of Commerce states that it had around $25 billion in monoline insurer exposure. For this most part, this had been suggested by analysts, many of whom were growing tired with CIBC’s lack of disclosure of the monoline exposure. While some disagree, this type of exposure may lead CIBC to raise even more capital than it already has to keep itself afloat and away from devastating margin calls. At risk, is the bank’s domestic retail bank which would first require the infusion of capital. CIBC hopes to allay these fears and a possible ‘run’ on the bank by retail consumers.