Banks forced to write-off record amount

The amount of debts that financial institutions have had to write off because of defaulting borrowers increased significantly in 2009, according to figures released by the Bank of England.

Last year financial institutions wrote off £4.12bn in credit card loans, up from the previous record amount in 2008 of £3.2bn and the value of mortgages written off more than doubled from £408m in 2008 to £984m in 2009.

Other loans written off rose from £3.2bn to £4.2bn - pushing up the total amount of write-offs by UK lenders to £9.3bn. In addition to this, financial institutions wrote-off £5.9bn that was lent to non-financial businesses.

These figures may mean that small firms - many of which have struggled to access bank finance since the recession began - find is even more difficult to access funds from banks.