US banks face $31 bln loss on mortgage buybacks-S&P

* U.S. banks face up to $31 bln loss on mortgages-analyst

* Repurchase losses will ‘hamper’ banks’ recovery

NEW YORK, Nov 4 (BestGrowthStock) – The top U.S. banks could face
up to $31 billion in losses from buying back bad mortgages,
Standard & Poor’s said in a report on Thursday.

Large U.S. banks are facing pressure to buy back soured
home loans that they packaged into mortgage bonds and sold to

Bank of America Corp (BAC.N: ) and JPMorgan Chase & Co
(JPM.N: ) have the most exposure to such potential repurchase
obligations, followed by Wells Fargo & Co (WFC.N: ), Citigroup
Inc (C.N: ), US Bancorp (USB.N: ) and PNC Financial Services Group
(PNC.N: ), S&P analyst Vandana Sharma wrote on Thursday.

The six companies could face up to $43 billion in total
losses from mortgage buybacks through 2012, but they have
already accounted for about $12.4 billion of those potential
losses, according to the report, which cited a recent S&P

The potential mortgage buyback losses would affect the
banks’ future profits, but are “not likely to affect our view
of the banks’ capital adequacy,” Sharma wrote.

But those losses on mortgage buybacks, combined with the
effects of increased regulation and an expected decrease in net
interest income, “will likely hamper the financial recovery of
the U.S. banks in 2011 despite declining credit costs,” Sharma

Shares of the six banks were trading up on Thursday
afternoon. Bank of America was one of the top performers among
bank stocks, trading up 3.7 percent at $11.95.
(Reporting by Maria Aspan, editing by Dave Zimmerman)

US banks face $31 bln loss on mortgage buybacks-S&P