Page last updated at 14:36 GMT, Wednesday, 27 May 2009 15:36 UK

Number of problem US banks soars

Dollar bills
While some US banks have seen profits recover, others are still suffering

The number of problem US banks jumped 40% to a 15-year high in the first three months of the year, a government watchdog has warned.

A total of 305 banks had financial woes in January-March, up from 252 in October-December, said the Federal Deposit Insurance Corporation (FDIC).

The increase came as banks continued to grapple with bad mortgage and credit card debt amid the recession.

At the same time, industry-wide banking profits also rose in January-March.

The FDIC said profits across the industry hit $7.6bn (£4.7bn) in the first quarter of 2009, led by higher revenues at the biggest banks as their trading performance recovered.

This profit compares with a record loss of $36.9bn for October-December, but is still down 61% on the $19.3bn profit record for January-March last year.

Under US law, the FDIC insures consumer bank deposits and has the power to take over failing banks.

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