U.K. Bank Loan Write-Offs Hit Record Highs

LONDON -- Write-offs and other revaluations of sterling and foreign-currency loans by U.K. banks and building societies both marked record highs in the third quarter, underscoring the continuing challenges faced by financial institutions and the disincentives to extend more credit.

Write-downs of sterling loans jumped to £4.32 billion ($7.12 billion) between July and September from £3.61 billion between April and June, while write-offs of foreign-currency loans soared to £1.01 billion in the third quarter from £249 million in the second, data from the Bank of England Monday showed.

Both figures were the largest since the central bank began publishing the data series in March 1993.

Within sterling loans, the largest write-downs were made on individuals' credit-card debts, which accounted for £1.6 billion of the total. Also making a large contribution were write-offs on corporate loans, which reached £1.3 billion.

The rise in sterling-loan write-offs takes the total for the first three quarters of this year to £10.9 billion, already well over the total £9.3 billion seen in the 2008 calendar year.