After years of rising profits and sound financials, the global banking industry finds itself in a much more difficult operating environment. Capital levels have become depleted as asset values, particularly for asset-backed securities (ABS) and collateralized debt obligations (CDOs), have dropped. As a result, banks took significant writedowns in the third quarter and may announce more in the fourth. In order to shore up their capital bases, major global banks may look for help in Asia and the Middle East where sovereign wealth funds (SWFs) have a significant amount of capital and a predisposition for investing in financial firms.

Banks around the globe took significant writedowns to their mortgage-related assets in the third quarter. The writedown at Citigroup («www.businessweek.com»; 33) was about $3.3 billion in the third quarter, and the bank is expected to take between $8 billion and $11 billion in additional writedowns. A number of others, including UBS («www.businessweek.com»; 50) ($3.4 billion) in Switzerland, HSBC («www.businessweek.com»; 85) ($3.4 billion), Bank of America («www.businessweek.com»; 46) ($3.3 billion), Barclays («www.businessweek.com»; 46) ($2.7 billion), and Wachovia («www.businessweek.com»; 43) ($1.3 billion) all wrote down the value of assets in the third quarter.

Amidst these devaluations, the capital ratios at many banks have come under pressure. Overall, the Tier 1 capital ratio (a measure of capital adequacy) for U.S. commercial banks is on the decline, according to data from the Federal Deposit Insurance Corp. (FDIC). In the third quarter of 2007, the industry’s Tier 1 capital ratio was 9.5%, down from 10.1% a year prior.

For some individual banks, this decline has been more pronounced. At Citigroup, for instance, the Tier 1 capital ratio was 7.3% at the end of the third quarter, down from 8.6% at the end of 2006 and below its target level of 7.5%. Wachovia’s Tier 1 capital ratio has slipped more modestly, declining to 7.1% as of the third quarter from 7.4% at the end of 2006, while Bank of America’s ratio slid to 8.2% from 8.6%. UBS has seen its Tier 1 capital ratio fall to 10.6% as of the third quarter from 11.9% in 2006.

Citigroup turned to the Middle East, where SWFs have been amassing cash as a result of the boom in oil prices. The world’s largest SWF, Abu Dhabi Investment Authority (ADIA), agreed to invest $7.5 billion in Citigroup. The ADIA will receive convertible bonds that carry an 11% coupon, which will then convert into a 4.9% stake in the bank between March 2010 and September 2011.

According to S&P equity analyst Frank Braden, Citigroup’s deal with ADIA underscores its need to boost capital levels, while it attempts to avoid a dividend cut.

Other banks looking to raise more capital to offset these asset declines may also find willing partners in the Middle East and Asia. In general, SWFs have been frequent acquirers of bank stakes. In July 2007, China Development Bank agreed to buy a 3.1% stake in Barclays for about $3 billion. The Dubai International Financial Centre (DIFC) recently took a stake in Germany’s Deutsche Bank («www.businessweek.com»; 132). Temasek Holdings, based in Singapore, has equity in a range of banks, including Barclays, Standard Chartered («www.businessweek.com»), China Construction Bank («www.businessweek.com»), DBS Bank («www.businessweek.com»), ICICI Bank («www.businessweek.com»; 61), and Sberbank («www.businessweek.com»).

In total, SWFs have an estimated $2.5 trillion in assets, which are expected to continue to grow rapidly on the back of the boom in oil prices and the torrid pace of economic expansion in China and the major oil producing countries. As U.S. and European financial services firms struggle to overcome the current credit crisis, one solution may be found in these state-run funds, which are increasingly looking for new places to invest their growing wealth.

LOS ANGELES: A strike by Hollywood writers began in New York just after midnight Monday, even as negotiators for screenwriters and producers continued talks toward a new contract under the eye of a federal mediator.

As of late Sunday night here, there was no sign of a breakthrough. And more than 12,000 screenwriters represented by the Writer Guild of America West and the Writers Guild of America East in the early morning hours in New York began the first industry-wide strike since writers walked out in 1988. That strike lasted five months and cost the entertainment industry an estimated $500 million.

A contract between the unions and the Alliance of Motion Picture and Television Producers Д which represents networks, studios and other producers Д expired Wednesday night after more than three months of acrimonious negotiations. Guild leaders called for a strike to begin Monday morning. A federal mediator, who joined the talks last week, asked the sides to continue talking in a Sunday session.

Throughout the weekend, guild leaders held orientation meetings for strike captains, who would supervise picketing teams, and otherwise prepared for an effort to shut down as much movie and television production as possible. Representatives for the producers and writers on Sunday declined to comment on the talks.

The Writers Guild of America East said that beginning at 9 a.m. Monday, hundreds of its members would picket outside Rockefeller Center, with its cluster of major media companies in the neighborhood. And picketers here are expected to march outside more than a dozen studios and production sites in four-hour shifts, one beginning at 9 a.m., the other at 1 p.m.

The sides have been at odds over, among other things, writers demands for a large increase in pay for movies and television shows released on DVD, and for a bigger share of the revenue from such work delivered over the Internet.

A doctor told an inquest today that he believed it would have been impossible to amputate the leg of a man who eventually died after he was trapped in fast-flowing floodwater.

Herman Vixseboxe, an accident and emergency consultant, said he found Michael Barnett unconscious and with no pulse when he arrived at the storm drain where the victim was trapped.

The inquest heard how Barnett, 28, became stuck while clearing debris from the drain during the floods that inundated parts of Hull on June 25.

Barnett died from hypothermia after a four-hour effort to free him by emergency services and neighbours in Astral Close, Hessle.

Vixseboxe told the inquest in Hull that when he was called to the scene he had expected to be required to perform an amputation, and took a special saw with him.

But he said the extent of the flooding in the city meant the journey in the ambulance took much longer than he had expected. When he arrived, the water was up to Barnett’s lips and his head was being held by a police diver.

Vixseboxe said he checked for vital signs but there was no pulse. The doctor told the jury he believed Barnett by this time was “at best” in a deep coma.

He was asked by the coroner, Geoffrey Saul, why he had not performed an emergency amputation of Barnett’s leg to free him.

The consultant said the patient was stuck fast and he could not feel Barnett’s leg from where he was.

“It would mean I would need to go under water and perform any operation under water,” he said. “I would need the help of the diving team, and the diving team at that stage told me that it was not an option.”

Vixseboxe said the divers said they were having trouble keeping on their feet due to the suction force of the water going into the culvert behind the temporary grille by which he was trapped.

The doctor also said visibility in the water was such that he could not see his hand in front of him. “I did not think it was possible,” he told the jury.

He said he had arrived thinking Barnett was trapped by the lower leg but later found he had been stuck at the thigh, which would have made an operation much more difficult.

The doctor said he could not attempt to resuscitate Barnett while he was in the water and waited in the ambulance until a crane arrived to pull him out an hour later.

He told the inquest that because of the length of time Barnett had now gone without blood circulating to his brain, he did not try any resuscitation.

Asked by the coroner if he thought there had been any chance of resuscitation at this point, Vixseboxe said: “Not at all. No.”

Earlier, a Home Office pathologist, Alfredo Walker, told the inquest he had recorded the cause of Barnett’s death as hypothermia.

He said he found a fracture on one of Barnett’s legs just below the knee, but he could not say at what stage of the ordeal this had happened. The inquest continues.