Lower losses than feared at Barclays

In an unexpected trading update, the bank announced that it had made a total of £600 million write-downs in the third quarter, and a further £900 million in October.

Over the four-month period, Barclays made a total of £700 million write-downs on exposure to positions in high-grade collateralised debt obligations (CDOs) based on asset-backed securities (ABSs) of US subprime mortgages, and another £400 million on mezzanine exposure. Trading book losses on ABS and CDO holdings, and losses on its US subprime whole loan portfolio, led to another £400 million, totalling £1.5 billion.

The bank said the losses were offset by accounting gains on its debt - wider credit spreads reduced the carrying value of its £55 billion of debt, leading to gains of £400 million over the four months. The total net write-down is therefore £1.3 billion, the bank said.

Barclays' shares were suspended from trading last week after falling 9% on rumours of massive write-downs. At the time, the bank denied the rumours and said it would announce its losses with its third-quarter results at the end of this month.

See also: $400 billion losses on subprime, predicts Deutsche Bank
Dresdner hit by credit crisis, but BNP sails through
S&P: Two years of problems ahead

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