These instruments, collateralised debt obligations (CDOs), are packaged from sub-prime, or risky, mortgages in the United States - which sparked the global credit crunch.

Mr Wardham and Mr Garg said that the prices of asset-backed CDOs have slumped about 50 per cent since the end of the last quarter.

And the continued appreciation of the Singapore dollar may add to losses reported by local banks for the market value of US-dollar denominated CDOs.

That means: more losses to come in the fourth quarter and beyond, on top of those already reported by DBS and United Overseas Bbank, they say.

'Among the three banks, we expect maximum impact for DBS, as its size of exposure is the largest at $2.36 billion,' they say.

They calculated that DBS, which made provisions of $85 million at the end of September, may make further mark-to-market losses of $116 million in the fourth quarter.

UOB is expected to be least affected. It may take a further $10 million provision on top of $54 million already reported.

But OCBC, which on Tuesday announced an allowance worth $221 million against its exposure of $270 million in asset-backed CDOs, far surpassed JP Morgan?s expectations of how much provisions it would swallow in the fourth quarter.

The analysts calculate that OCBC's total provisions would be about $166 million, which works out to about $67 million for the fourth quarter.

OCBC's aggressive write-downs are 'prudent', in light of the recent downgrades by ratings agencies on the quality of CDOs, said Mr George Koh, a Cazenove analyst.

'We tend to believe that OCBC's portfolio is not inherently more risky compared to the other two local banks, but that management chose to make a wise decision in writing down its portfolio aggressively,' he said.