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Taxpayer-funded Lloyds Banking Group reported losses of £4 billion today as it paid the price for reckless lending.
It saw toxic debts balloon by more than five times to £13.4 billion in the first half of this year after the takeover of troubled HBOS, which was instigated by Gordon Brown.
The group is 43 per cent owned by the taxpayer who is now nursing heavy losses on the £17 billion investment.
Chief executive Eric Daniels blamed HBOS for 80 per cent of the write downs and said the fall in property prices this year had a significant impact. The half-year results showed Lloyds racked up losses of £3.96 billion. It made a profit of £2.78 billion in the same period last year.
Mr Daniels said: “2008 was a difficult year for the banking industry and the first half of 2009 proved no less challenging. While the environment will remain challenging, management expects the economy to stabilise in the second half and start recovering slowly in 2010.”
The terrible Lloyds figures come the day after fully-nationalised Northern Rock reported losses of almost £725 million after it wrote off more than £600 million in bad loans.
Lloyds, for years seen as a safe bank, merged with the far more aggressive HBOS last year to save the Halifax and Bank of Scotland owner from collapse.
The takeover has since cost Lloyds chairman Sir Victor Blank his job.
Barclays and HSBC, which did not require government bailouts to survive the financial crisis, this week reported combined profits of £6 billion driven by their strong investment banking businesses.
Lloyds shares rose 5.4p to 89.62p today leaving taxpayers sitting on a £4 billion loss on their investment in the bank.
Mr Daniels said he was confident the takeover of HBOS will be beneficial in the long run.
“We have no regrets at all,” he said. When you look at the medium term outlook or the group, this is going to turn into a very good deal.
“We have to look at the deal and the performance over a good few years and we have confidence in the future.”
Lloyds now expects house prices to fall by seven per cent this year against its earlier forecast of a 15 per cent slump.
Reader views (5)
A 4B loss and their share prices rises! Funny old world!
- Ken Bethell, Puerto de Mazarron, Spain, 05/08/2009 16:25
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This sounds like our mp's over their expenses swindle !
"IT WASNT ME !"
- Ronnie, Carlisle, 05/08/2009 12:16
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TUT TUT TUT.
What on earth went on here, it MUST have been a huge amount of pressure from the govt to get Lloyds, traditionally known as boring and safe to ignore due dilligence and merge with this poisoned dagger of a Bank. The sad thing is, its not just Lloyds paying for the mistakes of HBOS but US! and what do we get on our return? hundreds of thousands of job losses. They shouldve let it, and its toxic debt go belly up. The same amount of people are losing their jobs now anyway!
- Alana Cunningham, London, 05/08/2009 11:50
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Why don't we give the directors a massive bonus for their achievements.
- Charles, London, 05/08/2009 11:18
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No problem, surely. Lloyds will have little trouble recouping most of these losses from their bank charges and the interest they charge on their credit cards.
- Graham Rodhouse, Helmond, Netherlands, 05/08/2009 10:25
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