Alliance & Leicester to Take $367 Million Hit

British bank Alliance & Leicester said on Tuesday it would take a 185 million pound ($367 million) hit from losses on complex financial instruments, more than three times its previous estimate of 55 million.

The bank also said it had pre-funded its maturing medium-term needs to the end of this year, up from its previous estimate of the third quarter, and that Chief Executive David Bennett was on temporary leave due to an illness.

Alliance & Leicester (A&L) shares fell by as much as half last year amid concerns it faced a funding crunch as banks restricted lending to one another following losses on low quality U.S. mortgages. It was such a crunch that led Northern Rock to seek emergency help from the Bank of England.

A&L calmed fears in November by saying it had agreed a 4 billion pound, two-year financing facility with Credit Suisse.

However, it also said at that time that, as of the end of October, it would take a hit of 55 million pounds due to losses on complex financial instruments, such as mezzanine and capital notes in structured investment vehicles.

The bank said on Tuesday this charge had risen to around 185 million pounds for 2007 as a whole.

Excluding the charge, A&L said its 2007 underlying profit would be in line with its previous guidance.

A&L shares closed at 725 pence on Monday, valuing the business at about 3.3 billion pounds, and traders said the shares were seen opening higher after the trading update. Shares fell 3.5 percent on Tuesday, however.

The bank also said Finance Director Chris Rhodes would stand in as chief executive while David Bennett was on temporary leave due to an abdominal illness.