British bank Alliance & Leicester, which is being taken over by Spain's Santander, said first-half profits were almost wiped out due to a £209 million hit to the value of risky assets and higher funding costs.
A&L, Britain's seventh-biggest listed bank, today said it made a pretax profit for the six months to the end of June of £2 million ($4 million), down from £290 million a year before. The result was in line with analysts' expectations.
A&L last month agreed to a £1.3 billion takeover by Santander and said it expects the deal to complete in or around October.
The deal offers greater stability and certainty at a time of "significant external risks" due to a worsening economy and turmoil in financial markets, it said.
A&L said the value of certain treasury investments fell by £66 million in the first half and the impairment of other assets cost £143 million. It had warned in May it would take a £192 million hit.
The bank said strategic funding had cost it £70 million in the first half.