Lloyds Banking Group plc (erstwhile Lloyds TSB Group plc) is expected to write off as much as £21 billion of bad debt from its books in the year 2009. The H1 2009 (Jan – June) results which are likely to be declared by July end or early August are expected to show more losses than in the previous year same period. The losses will be mainly because of the high provisions which the bank is expected to make. According to an estimate the write-offs to be made in the H1 2009 will be more than that made by HBOS and Lloyds TSB combined in 2008. The huge write down in one of the biggest banking group of United Kingdom (UK) indicates that the banking system is yet to stabilize.
The UK Government has invested £50bn so far in Lloyds and RBS, but that could rise when Lloyds joins the asset protection scheme. At present, the state's stakes are worth £7.5bn and £14.3bn. Notably, UK Financial Investments (UKFI), the agency that manages the stakes for the Treasury, holds a majority stake in the company (43 per cent of Lloyds) following the government support. This holding could rise even higher, as the bank issue shares to insure its bad loans with the Government. However, the Treasury is hoping that it can recover its investment, although it may have to wait for some more time. When things will improve, UKFI plans to sell its stake and return the bank to the private sector. Any such share sale will have to be spread over several years in order to prevent huge share inflow into the system.
In 2008, Lloyds had acquired HBOS for about £12 billion. The deal was backed out by UK government to prevent collapse of the banking system. However, Lloyds shareholders saw wealth erosion after a £15 billion 'black hole' was discovered in HBOS accounts. Many of the Lloyds shareholders’ are skeptical of a possible government-bank nexus behind this deal as they lose a huge portion of their holdings (about 85 per cent). Furious Lloyds shareholders have demanded transcripts of secret negotiations between Mr Brown and the bank's chairman Sir Victor Blank last July and September.
About Lloyds Banking Group plc
Lloyds TSB Group plc was renamed Lloyds Banking Group plc on 19 January 2009, following the acquisition of HBOS plc. The group owns the Lloyds TSB brand which is one of the largest retail bank in the UK brand and came into existence in 1995 by the merger of Lloyds Bank and the Trustee Savings Bank (TSB Bank).
Under the UK government Asset Protection Scheme announced on March 7 Lloyds has to provide a total of £14 billion of additional lending in the period up to 1 March 2010 to boost the spending and investment activities which could be vital in avoiding a prolonged recession.
The UK Government has invested £50bn so far in Lloyds and RBS, but that could rise when Lloyds joins the asset protection scheme. At present, the state's stakes are worth £7.5bn and £14.3bn. Notably, UK Financial Investments (UKFI), the agency that manages the stakes for the Treasury, holds a majority stake in the company (43 per cent of Lloyds) following the government support. This holding could rise even higher, as the bank issue shares to insure its bad loans with the Government. However, the Treasury is hoping that it can recover its investment, although it may have to wait for some more time. When things will improve, UKFI plans to sell its stake and return the bank to the private sector. Any such share sale will have to be spread over several years in order to prevent huge share inflow into the system.
In 2008, Lloyds had acquired HBOS for about £12 billion. The deal was backed out by UK government to prevent collapse of the banking system. However, Lloyds shareholders saw wealth erosion after a £15 billion 'black hole' was discovered in HBOS accounts. Many of the Lloyds shareholders’ are skeptical of a possible government-bank nexus behind this deal as they lose a huge portion of their holdings (about 85 per cent). Furious Lloyds shareholders have demanded transcripts of secret negotiations between Mr Brown and the bank's chairman Sir Victor Blank last July and September.
About Lloyds Banking Group plc
Lloyds TSB Group plc was renamed Lloyds Banking Group plc on 19 January 2009, following the acquisition of HBOS plc. The group owns the Lloyds TSB brand which is one of the largest retail bank in the UK brand and came into existence in 1995 by the merger of Lloyds Bank and the Trustee Savings Bank (TSB Bank).Under the UK government Asset Protection Scheme announced on March 7 Lloyds has to provide a total of £14 billion of additional lending in the period up to 1 March 2010 to boost the spending and investment activities which could be vital in avoiding a prolonged recession.
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