British banks may be sitting on big credit-crunch losses because their accounting methods differ from those of investment banks that have recently declared write-downs.
UBS, Deutsche Bank, Citigroup and Merrill Lynch have owned up to billions in losses on mortgage-backed securities and leveraged debt in recent weeks. But UK banks have remained largely silent, even though some are major players in these markets.
European and American banks report quarterly, making it harder for them to escape scrutiny, whereas UK banks report twice a year, with the next results season in February.
But Deutsche, UBS and the US banks also account for the current value of assets through their profit and loss account, whereas UK commercial banks only have to take an impairment charge on their P&L if they think that they are going to lose money through non-payment. That is a longer-term calculation than the snapshot of "marking to market".
Tony Clifford, a partner at Ernst & Young, said: "British banks have smaller investment banking operations and a smaller proportion of their assets will be at fair value, so the numbers should be somewhat smaller. Also, the markets have a chance of recovering by the end of the year. The US banks have been unfortunate in that they have been caught by the third quarter."
If a UK company expects results to be significantly different – about 5 per cent or more – from analysts' consensus, they are meant to issue a statement. But investors are wary about the potential losses brewing at Britain's banks.
The biggest concerns are Barclays and Royal Bank of Scotland, both of which have large, debt-focused corporate and investment banking businesses. Bob Diamond, who runs the Barclays Capital investment bank, said last month that his business was profitable after marking assets to market. RBS's investment banking boss, Johnny Cameron, gave reassuring guidance at results in August.
Barclays' shares should be performing well after it lost the battle with RBS for ABN Amro, but concerns about the effect of the credit crunch are weighing them down. Barclays is due to issue a trading statement at the end of November, but Oriel Securities' analyst Mike Trippitt argued that it should be brought forward to this month.
"We have seen clear statements from UBS, Citi and Deutsche," Mr Trippitt said. "Barclays doesn't report quarterly, but now is the time we should be hearing something about the third quarter. It's a significant issue in investors' minds for Barclays and RBS."
Many City analysts have been unable to publish notes on Barclays and RBS for the past six months because their banks were advising on the battle for ABN Amro.
The difference in reporting methods between British commercial banks and US and European investment banks is mainly to do with the way the companies have traditionally viewed the world. Investment banks take the view of a trading desk in writing down the value of assets, whereas commercial banks are traditionally lenders and make judgements about whether they will get their money back.
British banks have not had it all their own way. The US investment banks' reported losses have been flattered because this is the first year under international standards that they have been allowed to mark down their liabilities as well as their assets. This meant that the reduced value of bonds issued by the banks produced a technical profit.
"A lot of people feel very uncomfortable about firms taking profits that it would be impossible ever to realise," Mr Clifford said.