Wall Street financial institutions have donated around $9 million to assist the relief effort in New Orleans in the aftermath of Hurricane Katrina.

Citigroup, Merrill Lynch and JP Morgan Chase today announced that they had each donated $1 million to the American Red Cross. Other New York banks were pledging to match employee donations, dollar for dollar.

So far, about $9 million has been donated from financial institutions, but this could be doubled, depending on employee contributions.

Some banks, such as Citigroup, have also said that they will give customers in the region a reprieve on repayments. Steps would include "extension of grace periods, waiver of fees and other solutions as appropriate".

Many bank branches in the affected region remain closed.

The American Red Cross site is here.

Meanwhile, in London, Lloyd's, the world’s biggest insurance underwriting market, is set to be hit by claims totalling about £1 billion in the wake of Hurricane Katrina, Lloyd’s List reported today.

However, experts said it would take up to nine months to establish a clear picture of losses and that it is likely that insurers will be forced to raise their current estimates.

"Lloyd’s is quite right not to rush out an estimate," Michael Deeny, the chairman of the Association of Lloyd’s Members, said.

Munich Re, the largest re-insurer in the world, "came out with a figure within 24 hours, and I predict within another couple of weeks that it will be announcing a substantially increased estimate", he said.

On Tuesday, Munich said it could lose up to $400 million but that it would not revise its forecasts for 2005 after making provisions for hurricane damage in its original figures. The firm said that Katrina, which devastated the Gulf Coast states of Louisiana, Mississippi and Alabama and has killed hundreds, could cost insurers up to $20 billion.

Swiss Re, the second-largest re-insurer has also put the estimated overall insured loss at $20 billion with its own claims totalling some $500 million.

Hannover Re estimated today that the hurricane would wipe around €250 million (£170m) off its earnings this year and estimated total claims at $21 billion. The firm added that premiums would rise in the coming year.

"We expect to see additional significant hardening of prices and conditions in natural catastrophe and marine reinsurance," it said.

In the last year, some American households in hurricane-prone areas have seen insurance bills rise by up to one-third. However, many of the people hardest hit by Katrina, who have been left stranded in New Orleans without food, water or sanitation, are uninsured.

Mr Deeny predicted losses of between $20 billion (£11bn) and $30 billion for the insurance industry.

After the hurricane passed to the east of New Orleans over the weekend, it had been hoped the city had been spared. However, the scale of devastation has since become clear, leading even to calls to abandon the city.

It now seems probable that Katrina will surpass Hurricane Andrew, which struck Florida, Louisiana and Mississippi in 1992 and was the most expensive hurricane in American history, with insurers paying out around $21 billion by today's values.

Fitch Ratings, the international financial ratings agency, said on Tuesday that Katrina would probably be the largest loss since the terror attacks of September 11, 2001, which cost insurers $20 billion. Uninsured losses are likely to at least match those covered, it added.

"Total losses - insured losses plus uninsured losses - are often double the insured loss and Fitch notes that flood losses are generally not covered by homeowners' policies," Donald Thorpe, a senior director, said.

"These insurance losses are in addition to the damage caused by Katrina's earlier land fall in Florida late last week that caused an estimated $600 million to $2 billion in insured losses. There is also the possibility that Katrina has caused significant damage to offshore oil drilling facilities in the Gulf of Mexico."

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