CIBC, the Canadian bank that last week made 60 of its London-based staff redundant, has said it could take as much as a $2bn (£1bn) hit from its exposure to the US sub-prime mortgage market. Daily Telegraph

The bank warned that there was a 'high probability' that it would suffer a 'large charge' when it reports its next set of results early next year.

The Canadian bank’s disclosure of its potential losses came after credit rating agency Standard & Poor’s downgraded ACA Financial Guaranty Corp, a troubled bond insurer, to junk status.

CIBC said the insurer was responsible for providing it with hedging protection against $3.5bn of exposure to the US sub-prime mortgage market.