Banks reveal bad debt write-offs

The bad housing market in the US has had effects that have resounded all over the globe. Not only have large companies like Citigroup suffered huge losses but the Swiss bank UBS seems to have suffered the worst of it.

UBS is an investment bank which has written off $10 billion from its involvement with sub-prime mortgages and the bad debts that have arisen from it. They are likely to make a projected loss for 2007 and as such have had to raise an extra 2 billion swiss francs as capital to help them over the coming months.

It has also affected mortgage markets here in the UK and several of our well known banks have reported investment losses because of the collapsed US sub-prime mortgage market.

Lloyds TSB have announced they have made losses in the region of £200 million. The UK branch of HSBC has lost $3.4 billion in the 3rd quarter of 2007 and Barclays have seen a dent in their financial reports. Biggest loss of all though goes to the Royal Bank of Scotland (RBS) who have said they have written off about £1.25 billion due to its sub-prime exposure. Ouch.

However despite the enormous volumes of money involved, these losses are quoted as being "relatively limited", as they have been offset by the profit made from sales of some of the banks subsidary businesses. Next year they all plan to be back on track - older and wiser and perhaps a little less greedy?