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LONDON : Barclays bank on Thursday became the latest high profile financial institution to announce hefty losses linked to the US sub-prime mortgage crisis and consequent global credit crunch.
Barclays said its investment arm, Barclays Capital, took a 1.3-billion-pound (1.8-billion-euro, US$2.7 billion) hit between the start of July and end of October.
But the liability was far less than had been feared by analysts.
On November 9, Barclays shares dropped more than 9.0 percent in value on rumours the bank was to announce a massive write-down, triggering a temporary suspension in trading.
Chief executive John Varley said in a statement on Thursday: "Today's extensive disclosure demonstrates the strength and resilience of our performance during the year and in particular during the turbulent month of October."
Of the 1.3-billion-pound write-down, 0.8 billion was incurred last month.
The statement added that trading at Barclays Capital during the first 10 months of 2007 was ahead of the same period a year earlier, despite the 1.3-billion-pound write-down.
Ten-month pre-tax profits were made despite the bank having to write down 0.5 billion pounds of credit, mortgage and leveraged finance-related charges in the third quarter.
"The write-down figure to this point of 1.3 billion pounds is clearly less than the Doomsday rumours we heard last week of as much as 5.0 billion pounds," said Martin Slaney of GFT Global Markets.
Barclays is among a number of major global banks to suffer a fall-out from losses on securities backed by loans to American home buyers with patchy credit histories.
The US sub-prime crisis has also led to a credit squeeze as commercial banks have turned cautious about lending money to one another.
On Wednesday, Britain-based banking titan HSBC said that its bad debts in the United States linked to the sub-prime crisis and credit squeeze rose almost a third to US$3.4 billion in the third quarter, from the previous three month period.
The group added in a trading update that it had decided to shut an additional 260 branches at its US consumer finance division.
In September, HSBC had announced the closure of 100 branches with the loss of 750 jobs. HSBC said the additional closures would incur a restructuring charge of US$55 million.
But on Tuesday, US banking giant Goldman Sachs indicated it would not incur significant charges from the sub-prime crisis. That came after US peer Citigroup said it would have to write off up to another US$11 billion, far higher than the US$2 billion it saw in mid-October.
Elsewhere, Wall Street investment bank and brokerage Merrill Lynch revealed last month it would take a hit totalling US$7.9 billion. - AFP/de
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