Given the continuing slump in the market, the central bank is now expected to raise provisions to 30%.
Some lenders complain that they were prevented from raising provisions in early 2007, at the first signs of trouble.The regional banks do at least have plumper cushions than they did going into the last recession.
It said last week that it would have to inject more money into its American subsidiary, American Re, and that it would raise provisions relating to losses arising from the September 11th attacks last year to $500m.
Likewise, large write-downs in mortgage-related securities and the need to raise provisions for loan losses nearly wiped out all of the fourth-quarter earnings at the Wachovia Corporation, Bank of America's cross-town rival.
BLOOMBERG NEWS Spain Said to Demand Additional Loan Provisions by Banks | Spain plans to require banks to set aside an additional 35 billion euros ($45 billion) against loans to building developers, raising provisions to the equivalent of 30 percent of those loans, Reuters reports, citing unidentified financial people.
The company said it raised its provisions to 2.12percentt of its outstanding loans as of Sunday from 1.45percentt as of June 30.
HVB also reported its results and said it lost 360 million euros ($352 million) in the third quarter, down from a profit of 68 million euros a year earlier, as it raised its provisions for bad loans by 86percentto to 2.48 billion euros.
Kookmin Credit Card, a subsidiary of Kookmin Bank, Korea's largest commercial bank, reported that net income in the third quarter was $237 million, down 15.5percentt from the third quarter of last year, as it raised its provisions for bad debts to comply with a new government regulation.
Apart from the straightforward fund-and-raise provisions, the emerging House GOP legislation appears to contain the Vitter amendment and – according to House Democratic leader Steny Hoyer – a provision to strip the Treasury of its ability to deploy emergency measures to avoid default.
Also, the agriculture part has a lot of eyebrow-raising provisions, like the $147 million a year in reparations we send to Brazil to make up for the fact that it won a World Trade Organization complaint about the market-distorting effects of our cotton subsidies.
