BoE report puts global toxic asset writedowns at £1,800bn

BoE report puts global toxic asset writedowns at £1,800bn

The Bank of England has published new estimates of the amount of so called toxic debt that has been written down by global financial institutions, in relation to the credit crisis.

In its Financial Stability Report, the Bank puts the figure at £1,800 billion, adding that the size of its estimate of the collective writedowns facing banks, insurers and hedge funds, has more than doubled since April.

In the case of the UK High Street banks, Barclays, HBOS, HSBC, Lloyds TSB, Royal Bank of Scotland and Nationwide, the report estimates that losses from bad debt could reach a collective £130 billion over the next five years.

The estimate takes into account losses from toxic investments plus an allowance for bad debts on mortgages, credit cards and corporate loans, which are expected to rise.

According to the report, UK lenders have so far written down less than £20 billion in the credit crisis but latest calculations indicate that additional taxpayer support may be needed to shore up their balance sheets, over and above the £50 billion included in by the Government’s rescue package announced earlier this month.