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Banking sector to have 'worst year for two decades'

US banks will post near-unprecedented losses for 2008, an industry analyst has suggested.

Meredith Whitney at Oppenheimer & Co said that the loss ratios for the sector will exceed the 1.37 per cent registered at the peak of the early-1990s recession.

According to the expert, the full year ratio could even exceed 1.75 per cent, building from a first quarter loss of 1.25 per cent.

Speaking to the news agency, Ms Whitney added: "Bank losses will be the highest in the past 20 plus years as a result of greater numbers of individual defaulting on mortgages and other loans.

"[Defaults will be] of both higher frequency as well as greater severity.''

The Oppenheimer analyst has been consistently downbeat on banks' financial outlooks for 2008.

Last month, she estimated Citigroup's per-share loss for the first quarter to run as high as $1.15 - a prediction that has since been supported by evidence from Bloomberg ahead of the bank's announcement later this week.

Ms Whitney also reduced her 2008 earnings estimate for Wachovia from $2.70 to $1.70 yesterday, following disappointing first-quarter results from the investment bank.