May 12 (Bloomberg) -- U.S. and European banks and financial institutions have ``enormous losses'' from bad loans they haven't yet recognized and may have a harder time wooing sovereign-fund rescuers, Carlyle Group Chairman David Rubenstein said.

``Based on information I see,'' it will take at least a year before all losses are realized, and some financial institutions may fail, Rubenstein said at a breakfast meeting of the Institute for Education Public Policy Roundtable in Washington. He didn't name any companies.

``The sovereign wealth funds are not likely to jump into the fray again to bail out these institutions,'' Rubenstein said. ``Many financial institutions aren't going to be able to survive as independent institutions.''

Rubenstein said sovereign wealth funds are becoming wary after losing $25 billion on their investments in struggling banks and securities firms worldwide.

Financial institutions worldwide have recorded $329.2 billion in credit losses and writedowns and raised $246.6 billion in capital since the beginning of 2007. Rubenstein said about $60 billion of that capital was provided by sovereign funds last fall, and their investments today are worth about $35 billion.

Opportunity

On April 28 at a conference in Baltimore, Rubenstein said financial institutions and financial assets are ``the single greatest investment opportunities'' in the U.S. and ``a lot of private-equity firms like ours are going to try to make investments in these firms.''

Sovereign wealth funds and private-equity firms typically have different investment goals. Sovereign funds usually buy a minority stake in a quest for share-price appreciation, while private-equity firms often assume an ownership role and try to rebuild distressed companies.

Rubenstein said today that the industry and broader economy aren't likely to turn around until early next year.

``The truth is, we're in some kind of economic slowdown,'' Rubenstein said. ``I don't think it's going to be over for quite a while.''

He said the U.S. slowdown doesn't seem to be spreading to the rest of the world because the U.S. economy makes up a smaller share of global economic activity than it has in the past, when recessions typically spread worldwide.

Not as `Important'

``We're not as quite as important to the rest of the world economy,'' he said. He predicted ``slow to no growth'' for the next quarter or two.

The economy's troubles, compounded with tighter lending standards, have brought the leveraged-buyout industry to a standstill, he said. There are fewer buying opportunities because many owners of companies have an inflated and irrational sense of their property's value, he said.

``As soon as there is a little tick-up in the economy, people will want to sell again,'' he said. Rubenstein said he expected leveraged-buyout activity to pick up again after the November presidential election.

Ultimately, he said, he expects more private-equity firms will go public and consolidate like investment banks did 20 years ago, leaving a handful of ``brand-name'' firms controlling the industry.

``We'll see private-equity firms try to buy other private- equity firms,'' Rubenstein said.

To contact the reporter on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.netAlison Fitzgerald in Washington at Afitzgerald2@bloomberg.net

Last Updated: May 12, 2008 15:49 EDT