Sub-prime crisis: Barclays, HSBC losses
Thursday, 15 November 2007 12:00
Barclays faced an £800 million loss in October due to the US sub-prime crisis, while HSBC has put aside £1.6 billion to cover losses.
Barclays Capital, the company's investment bank division, now faces a total sub-prime loss of £1.3 billion.
The bank was rumoured to be facing much larger losses due to its exposure to investments tied to sub-prime loans, and its share price had dipped recently.
However, pre-tax profits and net income for Barclays Capital are up on last year.
"Today's extensive disclosure demonstrates the strength and resilience of our performance during the year and in particular during the turbulent month of October," said John Varley, Barclays Group chief executive.
Yesterday HSBC announced it is writing off £18.5 million worth of bad loans in the US sub-prime sector - where defaults by mortgage borrowers with poor credit profiles are rising.
However, third-quarter profits for HSBC were higher than expected.
The Bank of England governor Mervyn King yesterday predicted most UK banks would be able to weather the credit crunch storm - although disruption is expected for a number of months to come.
He also warned the share markets could still be vulnerable.
In the US, Bank of America has revealed a £3.3 billion sub-prime loss, along with investment banks Citigroup, Merrill Lynch, UBS and Bear Stearns all suffering through their exposure to the sector.
Japanese banks are also reporting hits stemming from the crisis.
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