Europe’s biggest bank HSBC announced that it has written off $3.2bn (£1.6bn) in the first quarter of 2008, as a result of the US sub-prime market.

The write offs are lower than the final quarter of 2007 and are in line with HSBC’s predictions. It is also reported that a further $2.6bn is to be written off in its global banking sector.

The bank has stated that profits in the US had fallen this year but profits in other markets had remained sturdy. This latest writedown has taken the total amount of bad debts sustained by the bank to $14.6bn in the US during the last year.

According to Josef Ackermann CEO at Deutsche Bank nerves are on the up in the financial markets down once again to the fears and uncertainty over the US sub primes.

Some markets he said had gone back to normal, whilst others remained in a panic state. He emphasised the need for greater clarity in banks and financial institutions disclosing losses and market prices. Financial confidence will return and it is expected that the economy will be much stronger.