Bank of America today admitted profits from corporate and investment banking fell 93 per cent from $1.43 billion (£698.2 million) to just $100 million.

Its capital markets division, which includes credit and structured products, fell into the red, as a $298 million gain in the same quarter last year became a $717 million loss in the three months to September 30.

It also took a $607 million hit from "breakdowns in traditional pricing relationships, which made hedges ineffective, and the widening of credit spreads" and the bank made a $527 million loss on mortgage-backed securities.

Kenneth Lewis, chairman and chief executive at Bank of America, said: "While the significant dislocations in the capital markets have hurt most participants, we are still very disappointed in our third-quarter performance."

Overall, Bank of America's profits fell from $5.42 billion to $3.7 billion during the quarter and revenues declined by 12 per cent to $16.3 billion. The bank's bad debt provision almost doubled from $1.17 billion in the third quarter last year to $2 billion.

During the quarter, Bank of America gave Countrywide, the biggest US mortgage lender laid low by the crisis in the sub-prime market, a $2 billion injection of capital to prop up its operations.

This year, Bank of America spent $21 billion on buying LaSalle from ABN Amro in a deal that became a major sticking point in the battle between Barclays and rival Royal Bank of Scotland for control of the Dutch bank.

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