US banks set aside $28bn for bad loans 

JP Morgan, Wells Fargo and Citigroup all make huge provisions for borrowers unable to repay loans in a move that will spook UK banks

Three Wall Street banks put aside a combined $27.9bn (£22.2bn) to cover future losses from soured coronavirus loans on Tuesday - a bumper charge likely to spook UK rivals as they estimate their own potential hit from the crisis.  

Big banks have doled out billions in emergency loans to prop up small companies and are now setting aside huge amounts amid fears many borrowers could struggle to make repayments.

Shedding a light on the depths of America's recession, the largest US lender by assets JP Morgan kicked off Wall Street's results season by revealing  that it had put aside $10.5bn (£8.4bn) for credit losses. 

Wells Fargo and Citigroup also announced huge coronavirus provisions on Tuesday, with their quarterly results showing that the pair were forced to set aside a respective $9.5bn and $7.9bn over the quarter. 

Citi chief Michael Corbat said the bank was "prepared for a variety of scenarios and will continue to operate our institution prudently given this unprecedented situation". 

JP Morgan's provision marks a new record for the bank and almost halved its profits for the second quarter. 

However volatile markets left traders busier than ever before and JP Morgan made $9.7bn from trading in the quarter, up 79pc,  while investment banking revenues were 91pc higher due to steeper fees.  

The trading desk boost meant that despite the huge write-off the bank still made a profit of $4.7bn, as well as posting its highest quarterly revenues in history. 

"We are prepared for all eventualities as our fortress balance sheet allows us to remain a port in the storm," said chief executive Jamie Dimon, the longest-serving banking boss on Wall Street.

He warned earlier this year that JP Morgan could be forced to axe its dividend for the first time if America was struck by a deep recession.

However on Tuesday he said it could continue paying a return to investors dividend unless the "economic situation deteriorates materially and significantly".

Mr Dimon has run JP Morgan since 2005, making him the only person still in charge of a major lender who took up the role before the last recession struck. 

Shares were flat at about $98 in New York but were trading at $140 at the start of the year.