Wachovia, the fourth-largest US bank by assets, on Friday estimated that the value of its subprime mortgage-related securities had fallen $1.1bn last month. It said loan-loss provisions would be increased by as much as $600m in the fourth quarter due to “dramatic declines” in home values.

The announcement came three weeks after Wachovia reported writedowns of $1.3bn in the third quarter and posted its first earnings drop in six years.