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WASHINGTON - THE US banking sector lost a combined US$26.2 billion (S$40 billion) in the fourth quarter amid a deepening financial crisis that forced massive writedowns, regulators reported on Thursday.
The Federal Deposit Insurance Corp said insured commercial banks and savings institutions swung to a loss in the quarter for the first time since 1990.
'Rising loan-loss provisions, losses from trading activities and goodwill write-downs all contributed to the quarterly net loss as banks continue to repair their balance sheets in order to return to profitability in future periods,' the FDIC said in a statement.
More than two-thirds of banking institutions were profitable in the fourth quarter, but their earnings were outweighed by large losses at a number of big banks, according to FDIC.
Total deposits increased by US$307.9 billion or 3.5 per cent, the largest percentage increase in 10 years.
FDIC said that at year-end, nearly 98 per cent of all insured institutions, representing almost 99 per cent of industry assets, met or exceeded the highest regulatory capital standards.
'Public confidence in the banking system and deposit insurance is demonstrated by the increase in domestic deposits during the fourth quarter,' FDIC chairman Sheila Bair said.
'Clearly, people see an FDIC-insured account as a safe haven for their money in difficult times.' For all of 2008, the banking sector earned 16.1 billion dollars, a decline of 83.9 percent from 2007 and the lowest annual total since 1990.
Twelve banks failed during the fourth quarter and one banking organisation received assistance. During the year, a total of 25 insured institutions failed.
The FDIC's 'problem list' grew during the quarter from 171 to 252 institutions, the largest number since the middle of 1995. -- AFP
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