Alliance & Leicester posted pre-tax profits of just £2m. Operating profits increased by 2% to £301m, however they also recorded £279m of extra costs, losses and write-downs due to the continuing turbulence in the mortgage markets.

Alliance & Leicester is to be taken over by Banco Santander as the bank believes it would be hard pressed to weather future shocks and write-downs. Being part of a larger group with a much more solid balance sheet is a sensible route for A&L to take.