Barclays is hit by sub-prime losses of £1.6bn

Article by Paul Bennet

Tuesday 19th February 2008, 07:27

Barclays bank, the UK’s third largest bank added more fear and a stark reminder that the credit crunch and sub-prime woes are far from over by reporting losses of more than £1.6billion today.

The admission comes as the bank unveils its 2007 profits after a testing year for the high street banking giant.

The bank is also expected to show that it has set aside around £2.65 billion to cover bad debts last year as its Barclaycard credit card business continues to see enormous losses.

The credit crunch could see Barclays reveal a further loss on top of its £1.3 billion write-down announced last November of up to £4bn and that figure could rise later in the year.

Analysts are pencilling in a 2% dip in pre-tax profits to £6.99 billion for 2007, against the £7.14 billion reported in 2006.

While some are predicting that Barclays' write-downs relating to the credit squeeze and the meltdown of America's sub-prime mortgage market may rise further, its investment banking arm is said to have been key in offsetting losses so far.

Analysts say that Barclay’s have tried to conceal more losses and that there has been a shifting of profits on balance sheets to try and minimise the hit, but senior advisers at the bank say that is not the case.

Britain’s third largest bank is the first to announce severe losses this year but others are expected to follow as fears grew yesterday of more sub-prime losses in the American mortgage sector, in which, many UK banks have been trading for some considerable time.

 

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