Agence France-Presse . London

Barclays, Britain's third-biggest bank, said on Tuesday that net profits sank in 2007 owing to fallout from the US subprime housing crisis and the related global credit squeeze.

Commercial banks around the world have suffered heavy losses connected to securities that were backed by home loans given to US homebuyers with risky credit histories.

Since last August, the US subprime housing crisis has sparked a so-called credit crunch as banks became jittery about lending cash to each other.

Barclays revealed on Tuesday in a results statement that its investment arm Barclays Capital took a hit of 1.635 billion pounds ($3.19b) in 2007 from the squeeze on global credit.

That was significantly higher than the previous estimate of 1.3 billion pounds given in November. As a result, net profits dropped by about 3.0 per cent to 4.417 billion pounds in 2007, compared with the performance in 2006.

'Barclays delivered a resilient financial performance in 2007 in a year of contrasting market conditions,' said chief executive John Varley in comments accompanying the release.

'The excellent results of the first half were achieved in a relatively benign environment; in the second half we were not immune from the impact of the credit market turbulence.'