A&L’s credit squeeze losses increase by £130m

by Gill Montia

Story link: A&L’s credit squeeze losses increase by £130m

Alliance & Leicester (A&L) has announced a £130 million rise in its losses from the credit squeeze.

In a trading update, the bank reported a £130 million increase in writedowns on Treasury investments, taking losses to £185 million for the full year.

The total sum includes a £155 million impairment charge on the value of A&L’s structured investment vehicles and a £30 million reduction in the value of its asset-backed securities, collateralised debt and other obligations.

The bank has confirmed that its funding situation is improved and that it has medium-term funding until the end of 2008.

However, analysts at investment bank, Dresdner Kleinwort, have pointed out that the funding A&L has secured does not take into account new business, which will need to be covered by growth in retail deposits.

A&L’s full results are due on 20th February and in the meantime, its chief executive, David Bennett, has taken leave to recover from illness and is not expected to make a speedy return to work.

The bank’s shares fell almost 25p to 700p yesterday, when analysts at Collins Stewart and Dresdner Kleinwort advised investors to sell the stock.

The fall revived speculation over rumours that last December A&L received an approached from Santander, the Spanish banking group that owns Abbey.