- 03Nov
(Reuters) - The four largest U.S. banks face potential losses of $26 billion over the next several years from their exposure to private-label mortgages and potential losses from delinquency, analysts at Goldman Sachs said.
Private-label mortgages are those offered by private institutions, as against those by government-backed agencies.
The brokerage said $28 billion of market cap was lost between -- Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N), Citigroup (C.N) and Wells Fargo & Co (WFC.N) -- as the market attempted to price in the potential impact of losses on private label securities.
The brokerage cut its price target on Bank of America, PNC Financial (PNC.N), and Wells Fargo and said that it favors JPMorgan Chase & Co (JPM.N) and Citigroup in the group.
Goldman raised its price target on U.S. Bancorp (USB.N), citing improved third-quarter earnings.
On the plus side, it said large banks have improved their credit portfolio and built capital ahead of Basel III implementation.
