Investors are on edge about the cost of write-downs caused by the US sub-prime or high-risk housing crisis and the subsequent tightening of global lending conditions.

It is a crisis that influential economist and New York University Professor Nouriel Roubini has said will kill off 'hundreds of banks' in the US.

In Britain, newspapers reported on Sunday that RBS will reveal a pre-tax loss of at least £1.0 billion (S$2.7 billion) from its previously-announced write-downs of £5.9 billion when it reports its earnings for the first six months of the year on Friday. Some analysts say Britain's second-largest bank could face a loss of as much as £1.7 billion.

RBS has already raised £12 billion to shore up its finances after huge sub-prime related write-downs and the mammoth takeover of Dutch giant ABN Amro.

The RBS news comes on the heels of gloomy results from major London banks.

Yesterday, HSBC Holdings, Europe's biggest bank by market value, reported a 29 per cent drop in profit to US$7.7 billion (S$10.5 billion) in the first half-year as bad loans rose in the United States.

While the bank's profit rose in Europe, Latin America and most of Asia, chairman Stephen Green said that the outlook was 'highly challenging' as emerging markets grow 'with less momentum' than before. The bank also raised its credit risk provisions by by 58 per cent to US$10.06 billion.

HBOS, Britain's biggest home lender, and Lloyds TSB, have already reported 70 per cent falls in earnings and Alliance & Leicester, in the process of being taking over by Spain's Santander, has admitted that its profits were nearly wiped out by the credit crunch, leaving it only £2 million in the black.

Barclays will on Thursday face scrutiny of any fresh credit crunch write-downs and is forecast to report a slump in first-half figures to £2.6 billion from £4.1 billion this time a year ago.

Only Standard Chartered, due to report today, is expected to report higher profits.

In the US, more banks are expected to go bust as trouble, which originated in sub-prime loans, spreads to other kinds of loans.

Mr Roubini, who advised the Clinton White House after his blog on the Asian financial crisis attracted the attention of Washington's economic and political elite, told weekly magazine Barrons on Sunday that these banks have only written down their sub-prime loans so far.

Still in front of them are their consumer-credit losses, for which they lack the reserves, and hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, he said.

AGENCE FRANCE-PRESSE, REUTERS