Banking Crisis May Cause $1.6 Trillion in Losses, Sonntags Says

By Oliver Biggadike

July 7 (Bloomberg) -- The global credit-market crisis will cause $1.6 trillion in losses at financial companies, the SonntagsZeitung said on its Web site, citing a confidential study from hedge-fund manager Bridgewater Associates Inc.

There will probably be an ``avalanche'' of distressed securities and financial institutions may not be able to raise enough new capital to cover their losses, the Zurich-based German-language newspaper said, citing the report.

The contraction in credit markets has saddled banks and brokerages with more than $400 billion in writedowns since the beginning of last year, according to data compiled by Bloomberg. Financial companies have raised $321 billion in capital over the same period, Bloomberg data show.

Capital is a buffer that insulates depositors at a bank from losses.

To contact the reporter on this story: Oliver Biggadike in Tokyo at obiggadike@bloomberg.net.