The return to a stable banking industry is at least a year away, credit rating agency Standard & Poor's warned today as it said US and European banks are entering a second wave of credit crunch losses.

Analysts slashed their forecasts for Lehman Brothers predicting it could announce losses of more than $3billion (£1.6billion) amid reports it has failed to raise new funds in Asia.

Citigroup cut its share price target for Lehman from $50 to $35. It forecast credit crunch write-downs for the latest quarter of $2.9billion. It adjusted its loss forecast downwards from a loss of 41 cents a share to a loss of $3.25.

Brokerage Bernstein sees credit crunch write-downs at Lehman at around $3billion. Its forecast swung from profits of 74 cents per share to losses of $1.40.

Citigroup cut earnings forecasts for Goldman Sachs and Morgan Stanley. It sees third-quarter write-downs of $1.8billion and $1.7billion respectively.

Lehman is due to report third-quarter figures on 16 September. But for its second quarter it had to make earnings predictions a week early, amid rumours of write-downs.

It is reported today to have held secret talks at the start of this month with Chinese and South Korean investors in a bid to raise some $5billion. Governmentowned Korea Development Bank and China's Citic Securities are said to have balked at Lehman's asking price of 50% above book value.

But Citic's secretary Tan Ning said: "We had no such talks ... In fact, this year we will focus on our domestic business as it seems there are no signs when the US credit problems may end."

A KDB spokesman said it was scaling back overseas assets and staff to reduce exposure to volatile foreign markets.

Lehman's chief executive Dick Fuld is due to report earnings next month, with analysts predicting he could write down up to another $4billion in investment, bringing the total to $12billion.

The firm has a slew of assets on the block and is said to be looking for buyers for part or all of its commercial property portfolio and its asset management arm centred on the highly profitable firm Neuberger Berman.

A sale of Neuberger Berman, which it bought for $2.6billion back in 2003, could raise up to $13billion. Some major private equity firms are said to be interested.

But Lehman faces problems in selling even its still-valuable assets as the broadening financial crisis has made it more difficult for potential buyers to secure financing for deals.