Goldman says there is light at the end of the tunnel for investors

The report says 40%, or $480bn, of those losses will hit US banks, brokerages and other institutions.

Goldman estimates that US financial firms have already reported losses of $120bn since the credit crunch began.

Banks made huge losses on investments backed by US mortgages. That is now hampering their ability to loan money, which threatens US economic growth.

"US leveraged institutions have written off less than half of the losses associated with the bursting of the credit bubble," the report said.

"There is light at the end of the tunnel, but it is still rather dim," it added.

The credit crunch caused the near collapse of US investment bank Bear Stearns earlier this month.

The bank's clients - worried about losses on mortgage-backed investments - started to withdraw funds, forcing it to ask for emergency funding.

Days later JP Morgan Chase announced a deal to buy the company.