Updated from 11:55 a.m. EDT

Loan losses at large-cap banks are expected to increase to levels that "exceed the Great Depression," high-profile banking analyst Mike Mayo writes in a note Monday re-initiating coverage on the large-cap bank sector at his new firm CLSA.

Mayo rates the U.S. bank sector at underperform, giving bearish ratings to 11 companies, according to the note. He says the government's efforts to curtail the financial crisis may not help as much as expected, "especially given that loans have been marked down to only 98 cents on the dollar, on average," he writes.

"The seven deadly sins of banking include greedy loan growth, gluttony of real estate, lust for high yields, sloth-like risk management, pride of low capital, envy of exotic fees, and anger of regulators," Mayo writes in the note.

"To a degree, each reflects a way that banks tried to compensate for lower natural rates of growth by taking more risk," he writes. "The effect was to front-load earnings only to have back-ended costs, the brunt which is getting felt today. The consequences of this risk, while not new, seem only midstream and have more to go."

He expects the ratio of loan losses to loans to rise to a range of 2% to 3.5% by the end of next year, given "ongoing problems in mortgage and an acceleration in cards, consumer credit, construction, commercial real estate and industrial," the note says.

Large cap names including Bank of America ( BAC) , Citigroup ( C) , JPMorgan Chase ( JPM), Wells Fargo ( WFC), PNC Financial Services ( PNC) and Comerica ( CMA) receive underperform ratings from Mayo.

BB&T ( BBT), Fifth Third ( FITB), KeyCorp ( KEY), SunTrust ( STI) and US Bancorp ( USB) receive sell ratings.

Shares of the bank stocks were falling on Monday.

Mayo is no stranger to the bank sector, but has been out of the limelight recently.

As a veteran analyst, Mayo has been one of the more outspoken and negative analysts against the banks and securities firms. Over the years, he has excoriated many bank management teams regarding their businesses during investor calls.

He left Deutsche Bank last month to join CLSA Asia-Pacific Markets. He was previously at Prudential Equity Group before joining Deutsche Bank in 2007. Mayo has also worked at UBS and Lehman Brothers, among other firms, and, early in his career, at the Federal Reserve.

Media reports say that Mayo left Deutsche Bank because the German company did not allow the analyst to voice his opinions on the troubled banks as freely as he wanted. This would not be the first time that Mayo and his superiors disagreed. Mayo, who was negative on bank stocks in the early part of the decade, was rumored to be fired from Credit Suisse over his pessimistic views of the bank sector and willingness to slap sell ratings on bank stocks.

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