Citigroup and UBS admitted today that their losses on sub-prime mortgage-related products exceeded the profits they had made from the high-risk loans.

Top executives from the banks were addressing a hearing of the Treasury Select Committee this morning, alongside representatives from Goldman Sachs and Deutsche Bank. MPs were questioning the banks about the part their companies played in the credit crunch that hit global markets in August.

Bill Mills, chief executive of Citigroup's EMEA investment banking business, told the MPs that "[Citigroup's] losses greatly exceed the profits we've made on [sub-prime] business over several years", while Jeremy Palmer, UBS's EMEA investment banking chief executive, said that he was unsure whether his own bank had made a profit on sub-prime but that he was inclined to think that it had not.

Jerry Corrigan, a managing director at Goldman Sachs and co-chairman of the bank's risk management committee, said: "On balance, [Goldman Sachs] probably made money." Lord Aldington, the UK chairman of Deutsche Bank's investment bank, said that he was unsure whether the bank had calculated whether it had made a profit. "My guess is that we'd have been more in the Goldman Sachs camp but that is a guess," he said.

Mr Corrigan attributed his bank's success to clever hedging. "In our second quarter in May we did sense that the deterioration, particularly in the sub-prime space, was worsening and we did begin to hedge our exposure in ways that turned out reasonably well from a financial point of view," he said.

The bankers denied that they had been reckless in the way they sold complex credit products to customers, but admitted that there were many lessons to be learned from the sub-prime crisis. "Mistakes were made but it's also true that the conditions that materialised were by any standards quite extraordinary," Mr Corrigan said.

They attributed the growth in the market for such products to the appetite among investors for high-yield investment products. "The reach for yield on the part of institutional investors goes a long way to explaining the rapid expansion of structured credit products," Mr Corrigan said.

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