US banks face trouble

US banks face trouble

NEW YORK, APRIL 15: This week's sharp sell-off in US stock prices spells trouble for big US banks getting used to stashing away riches from the lucrative business of investing in start-up technology companies.

This week's steep slide in the tech-laden Nasdaq market will hurt the value of those investment portfolios and knock down bank earnings, analysts said. Banks also may have to wait for a big pay-off on their stakes in private companies, which may delay going public in the tumbling market, they added.

Chase shares dropped 5 to 79-5/16 on Friday on the New York Stock Exchange, as did most broker and big bank stocks. Not all gains will vanish, since banks also hold stakes in private companies, which are relatively immune to Nasdaq's downturn, analysts said. In addition, many portfolios are run by seasoned investors who have weathered prior market dives, and not all investments are in tech companies, they said.

"What we are seeing in Nasdaq is not going to wipe out venture capital gains, but they will certainly be a lot lower if this keeps up," Cohn said. "The problem is that you are coming off such high base that for some of these companies, the drop will be noticeable."