For the world’s heavyweight banking players, the credit crunch must feel like the hangover that will never go away. Week after week brings news of fresh losses.

It is nine months since HSBC first sounded the alarm bells over its exposure to rising defaults among American sub-prime mortgage borrowers, against a backdrop of a housing market bubble in the United States that promptly and catastrophically burst.

The $1.76 billion provision taken by HSBC at the time, and the departures of figures such as Bobby Mehta, the head of its North American arm, now seem almost pedestrian given the rout of the subsequent months.

Since then, banks have written off a staggering $65 billion and even the heads of mighty Wall Street chief executives have rolled. Few would have thought that collosal figures such as Merrill Lynch’s Stan O’Neal and Citigroup’s Charles Prince would find themselves evicted amid an embarassment of red ink on the balance sheet.

Mr O’Neal stood down last week as head of Merrill after his firm took $8.4 billion worth of writedowns in the third quarter and paved the way for as much as an additional $10 billion this quarter. Less than a week later, Mr Prince resigned as chairman and chief executive of Citigroup in the wake of a $6.4 billion third-quarter writedown. His resignation was accompanied by a warning that the group may need to take $11 billion in further sub-prime related writedowns in the fourth quarter.

Their departures showed that no bank and no boss is invulnerable.

Now, in the US, almost every day seems to bring a new case of mammoth sub-prime related writedowns. Yesterday was no exception as Wachovia, America’s fourth-biggest bank, announced $1.1 billion of such losses for October alone. These losses emerged just two days after Morgan Stanley conceded that it would take a $3.7 billion hit in the fourth quarter from its exposure to high-risk mortgages.

The latest reported writedowns are part of an acceleration in sub-prime related loss announcements as the housing slump and high-risk mortgage defaults continue unabated.

In recent weeks some of Wall Street’s biggest and most prestigious firms have reported huge hits. The loss of Mr O’Neal and Mr Prince, while the most prominent, are not expected to be the last. James Cayne, head of Bear Stearns, is widely expected to be the next senior casualty after two hedge funds that his firm ran collapsed over the summer under the weight of sub-prime investment losses.

Bear Stearns’s June warning to investors that their holdings in the funds were almost worthless represented the first big sell signal on the international banking sector. It sparked four months of seizure in the credit markets, with only the bravest prepared to lend capital to each other.

Such has been the fevered speculation that some banks have been pressurised into revealing in advance the full extent of their likely quarterly losses. In Europe, Deutsche Bank, UBS and Credit Suisse each signalled their exposures ahead of results day. In the UK, unfounded rumours about Barclays and Royal Bank of Scotland have prompted calls for the banks formally to clarify their positions.

One big institutional shareholder said yesterday that “with a little prodding” from the Securities and Exchange Commission, the US regulator, bank disclosure had been improving week by week. “We welcome this,” he said. “The banks need to be more transparent about their situation.”

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