The stricken financial institutions sector will suffer another wave of securities-related writedowns and losses on loans in the second half of the year, potentially forcing the running total of writedowns banks have taken to “well over” half a trillion dollars, according to a new report.

Citigroup, Merrill Lynch and UBS have led the banking sector in writing down and reporting over $300bn (€206bn) of loan losses in the last year as a result of the turmoil from the sub-prime mortgage crisis, but that figure will rise to year-end as banks potentially face their toughest test yet.