In an unscheduled trading statement yesterday morning, Alliance & Leicester said the value of a range of its assets had now dropped by £185m, after telling shareholders the credit crunch had made a £55m hole in its profits for 2007.
Most of the extra losases came from A&L's investments in structured investment vehicles (SIVs), sophisticated debt vehicles which borrow short-term money and subsequently invest in longer term assets.
‘These SIVs need to be refinanced and in the current climate, liquidity is not readily available, so they have been forced to sell some assets in a distressed market,’ an A&L spokesman told The Guardian.
The losses mean A&L's operating profits for 2007 will be significantly lower than the £585m recorded in 2006. Excluding these losses, operating profits for the year would have exceeded £598m, according to A&L.
Further reading:
UK banks face further writedowns
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