A&L reveals worse-than-expected losses

In an unscheduled trading statement yesterday morning,
& 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

A&L profits up thanks to online banking

story in The Guardian

Related reading