Aug. 13 (Bloomberg) -- The cost of protecting bank bonds from default rose after UBS AG and JPMorgan Chase & Co. pushed writedowns and losses from the worldwide credit crisis to more than $500 billion.

Credit-default swaps on the Markit iTraxx Financial index of 25 European banks and insurers increased for the first day this week, climbing 2.5 basis points to 79.5, according to JPMorgan at 12:39 p.m. in London. Contracts on UBS were 2 basis points higher at 103, Deutsche Bank AG rose 2 to 81 and Royal Bank of Scotland Group Plc climbed 2 to 99, according to CMA Datavision.

Writedowns at $501 billion are near the International Monetary Fund estimate of $510 billion in an April report. Hypo Real Estate Holding AG, Germany's second-biggest commercial- property lender, announced a further 145 million euros ($216 million) of mark downs on debt-related investments today as second-quarter earnings plunged 95 percent.

``Of course there's more to come, that's for sure,'' said Tim Brunne, a Munich-based credit strategist at UniCredit SpA. ``Banks have not revealed everything.''

Bank losses are restricting lending, hurting companies and consumers as defaults and delinquencies on home loans soar, the Federal Reserve said this week. Most banks tightened lending standards and terms on all major loan categories over the previous three months, the Fed said Aug. 11 in its quarterly Senior Loan Officer Survey.

Default Protection

UBS announced $5.1 billion of writedowns yesterday, taking its total to more than $43 billion, the most for a European bank and trailing only New York-based Citigroup Inc. and Merrill Lynch & Co. globally.

JPMorgan posted a further $1.5 billion loss on mortgage- backed assets this week and said trading conditions for the second-biggest U.S. bank by market value ``have substantially deteriorated'' since July.

The cost of default protection on corporate debt jumped with the benchmark Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings rising 9 basis points to 555, JPMorgan prices show. The Markit iTraxx Europe index of 125 companies with investment-grade ratings increased 2 basis points to 94.

``We are not through the crisis by any means,'' said Brunne, who recommends investors buy default protection on high- risk debt, which is rated below Baa3 by Moody's Investors Service and BBB- by Standard & Poor's.

Debt Speculation

Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A rise indicates a deterioration in the perception of credit quality; a decline signals the opposite.

A basis point on a credit-default swap contract protecting 10 million euros ($14.9 million) of debt from default for five years is equivalent to 1,000 euros a year.

Credit-default swaps on the Markit CDX North America Investment Grade index, a benchmark gauge of credit risk linked to the bonds of 125 companies in the U.S. and Canada, rose 1.25 basis points to 134.5, according to New York-based Phoenix Partners Group.

To contact the reporter on this story: Abigail Moses in London Amoses5@bloomberg.net

Last Updated: August 13, 2008 07:49 EDT