Some of the biggest players in the British mortgage market will report investment writedowns of more than £4 billion this week as investors brace themselves for more bad news from Britain's embattled banking sector.

HSBC, the UK's largest banking group, is expected to write down as much as $5 billion (£2.5 billion) today as the credit crunch continues to take its toll on its American unit.

The bank, which owns the Household sub-prime lender in the United States, was one of the first British-based banks to give warning about the dire consequences of soaring defaults among American mortgage borrowers with patchy repayment records.

HSBC has already written off $14 billion in US bad debts and scaled back its local lending activities.

Analysts at Keefe, Bruyette & Woods (KBW) expect HSBC to record flat or even positive earnings for the first quarter.

The bank remains under pressure from Knight Vinke, the activist shareholder, which has taken the bank to task, most recently over long-term performance incentives for executives.

Knight Vinke is not expected to scrutinise HSBC over tomorrow's performance unless it is far worse than expected. Eric Knight, who runs Knight Vinke, is expected to speak at HSBC's forthcoming annual meeting.

HSBC's first-quarter trading update and briefing on its US unit will be followed on Wednesday by Alliance & Leicester (A&L), Britain's seventh-biggest bank.

KBW analysts are pencilling in pre-tax writedowns of about £200 million for A&L, which wrote down almost £400 million against structured assets in the fourth quarter last year.

Barclays, the third-biggest high street bank, delivers its first-quarter update on Thursday. KBW is predicting writedowns of about £1.4 billion before tax.

Analysts are eager for news on whether British banks will need to raise fresh equity capital or cut their dividends to help to shore up their balance sheets.

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