The pain of the credit crunch hit expanded to the Co-op yesterday as the organisation's financial arm was forced to cut the value of a structured investment vehicle.

Co-operative Financial Services booked a £32m writedown in its accounts, as it revealed that pre-tax profit in its banking division for the year ended 31 December 2007 was £50.4m, down on the £76m it earned last year.

If the impact of the SIV writedown was stripped out, profits before tax at the banking arm would have been £5.9m, or 7.7%, higher.

Co-op financial services said the writedown was in line with other banks and insisted that the writedown was not a result of the banking division's decision to withdraw from the low, fixed-rate mortgage market.

Further reading:

Read the full accounts here