Markets turmoil lands A&L with a £185m bill

Alliance & Leicester today said it would take a £185million hit from losses on its treasury investments - more than three times its previous estimate of £55million.

The bank blamed the turmoil in financial markets for the bigger than expected losses, which include an impairment charge of £155 million compared with just £40 million forecast in November.

Within the charge, £145million relates to structured investment vehicles (SIVs) and a further £10 million relates to collateralised debt obligations (CDOs).

A&L also saw the value of a number of other investments fall by £30 million in 2007 compared with earlier estimates of just £15 million.

The news came as A&L revealed chief executive David Bennett was off sick with an "abdominal illness" and was unlikely to return to work in the short term.

Finance director Chris Rhodes, who becomes acting chief executive in addition, said: "Financial market conditions have resulted in losses on certain treasury investments, reducing 2007 core operating profit to lower than in 2006."

However, he insisted profits excluding the extended losses would be in line with previous guidance of more than £598million against £585million in 2006.

Chairman Sir Derek Higgs said: "We wish David well and look forward to welcoming him back fit and well in due course."