Banks' '£18bn of hidden hits'

Banks and securities firms may have hidden up to $35 billion (£17.9 billion) in extra writedowns.

These losses have appeared on balance sheets but not income statements, says a survey of regulatory filings by Bloomberg. The balance-sheet adjustments come on top of the $344 billion of writedowns and credit losses already reported.

The news agency says Citigroup subtracted $2 billion from equity for declining value of home-loan bonds in its quarterly report without mentioning it in the earnings statement.

It says Dutch group ING placed €3.6 billion (£2.9 billion) of negative valuations in its capital account, but disclosed only an €80 million drop in income.

Taking losses on a balance sheet instead of an income statement is acceptable under accounting rules, which make a distinction between trading books and long-term investments, but the practice raises fears that the full scale of the losses may not yet have come to light.

Many banks argue that the valuations of assets will be reversed when markets recover.