Alliance & Leicester, Britain's seventh largest bank, has been hit with a fresh £391m credit crunch writedown, it disclosed today. Its shares fell more than 11 per cent by mid-morning to an eight-year low.

The bank made writedowns on treasury investments as well as on its exposures to structured investment vehicles (SIVs), and collateralized debt obligations (CDOs), of £192 million. This compares with the £185 million writedowns taken last year.

In addition treasury investment fair values fell £199 million in the first four months, compared with a decline of £147 million in the same period last year. This fair-value impact is taken against reserves and will not impact the profit-and-loss account.

Profits for the first four months of this year excluding its Treasury division are broadly in line with the same period a year ago.

David Bennett, group chief executive of Alliance & Leicester (A&L), said: "Core operating profit excluding Treasury was similar to the same period in 2007, although volatility in the financial markets has led to a further reduction in the value of certain treasury assets."

The number of A&L mortgage accounts over three months in arrears rose by 300 to 2,650 between January and April. These late payers accounted for 0.57 per cent of the bank's total mortgage book. A&L says the industry average is 1.34 per cent.

The bank has reined in its lending of new unsecured personal loans and tried to reduce balances outstanding with existing customers.

Although the value of unsecured loans in arrears rose by just £2 million, the reduction in balances outstanding meant that the proportion of unsecured balances where repayments were over 30 days in arrears rose to 5.65 per cent from 5.5 per cent at the end of 2007.

Mr Bennett added: "We are seeing no signs of stress in either our mortgage or unsecured personal loan portfolios, and we expect the retail banking impairment charge to be slightly lower than the £50 million reported in the first half of 2007."

A&L shares were the biggest faller in the FTSE 100 despite being off their worst, down 25.5p to 485p, a drop of 5 per cent.

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