The bank's market value has slumped in the past year
Half-year profits at Alliance & Leicester (A&L) have been almost wiped out after the UK mortgage lender wrote down the value of its assets.
Profit before tax for the first six months of 2008 sank to £2m, against £290m in the first half of 2007.
The bank blamed the global credit crisis for the write-downs, but said its core business was in "good shape".
Earlier this month, Spanish bank Santander agreed a deal to buy A&L for about £1.26bn.
The deal will see A&L shareholders get one Santander share for every three they now hold in the UK bank.
The move will give the UK bank "greater stability and greater certainty" amid risks of a worsening economic outlook and continued credit market disruption, the firm said.
Continuing credit problems
The declining value of its investments saw A&L take a £209m write-down for the first half of the year, slightly greater than the £192m expected hit it warned of in May.
But the market had already priced in these losses and investors showed tentative optimism over A&L's future as part of Santander.
Its shares rose 1.5 pence to 342p.
"Ultimately, with little new here, the driver of price remains the Santander offer," said James Hutson, an analyst at Keefe, Bruyette & Woods.
Earlier this week, HBOS - which owns Halifax and Bank of Scotland - and Lloyds TSB both reported sharp falls in profits for the first six months of the year due to the collapse of the wholesale money markets.
HBOS said pre-tax profits dropped 72% to £848m, while Lloyds TSB reported a similar profits tumble, to £599m, compared to the same period in 2007.
Besides the losses in its investment portfolio, the firm said it was well capitalised and that its retail and commercial banking businesses were performing better than expected.
It said the quality of its mortgage and unsecured personal loan books remained strong with little increase in the number of accounts in arrears.
But there was evidence it has not escaped the slowing housing market, with its share of gross home loan lending - the value of all new business and advances - down to 1.6% from 3.4%.
A&L also said it had cleared its mortgage book of all home loans made to sub-prime borrowers - those on low incomes or with patchy credit records - as well as clearing all its self-certified mortgages.