Foreign investors in Russian bonds are facing losses exceeding $33 billion (£23.8 billion), according to a conservative estimate, because of the government's effective default.

The losers include Mr George Soros's investment funds, which admitted yesterday they had lost up to $2 billion as a result of the Russian economic crisis.

The Russian loss is the largest suffered by Mr Soros's Quantum Group, said Mr Stanley Druckenmiller, chief investment strategist at Soros Fund Management.

Credit Suisse First Boston, the Swiss-owned investment bank, said that Russian elites had "plundered" the country's capital. It said its profits had fallen more than $250 million in less than two months because of Russia.

Mr Paul Luke, a senior emerging markets trader at Deutsche Bank in London, said losses on foreign holdings of Russian dollar and rouble-denominated bonds could exceed $33 billion. Other estimates have ranged up to $50 billion.

About 75 per cent of the paper value on Russia's hard currency bond debt had been wiped out, Mr Luke said. His estimate excludes not only bank lending and equities but also possible losses on rouble hedging contracts between foreign investment banks and Russian banks, most of which would be unable to honour their liabilities.

One senior US banker said the action would not be forgotten. "I don't think anybody's going to lend these guys a dime," he said.

The move also raised serious questions about whether other contracts would be honoured, he said. Mr Mark Mobius, head of emerging market investment at Franklin Templeton, a leading fund manager, said Russia had lost the trust of investors.

Mr Druckenmiller, however, was not critical of the government. "We took a risk and we were wrong," he said. Mr Soros warned in a letter published in the Financial Times two weeks ago that Russia's financial turmoil had reached a "terminal phase".

Credit Suisse First Boston (CSFB) yesterday said net profit so far in 1998 had plunged from $754 million at June 30th, after the first half, to $500 million. CSFB, which along with its clients accounted for 40 per cent of foreign ownership of the $40 billion Russian government debt market, is believed to have lost at least $350 million - and perhaps as much as $500 million - in Russia since June.

Traders estimated hedge funds would sustain about 25 per cent of the losses. The rest would be borne by foreign investment banks and US funds.