Lloyds Shares Continue To Fall
Lloyds Banking Group shares are under pressure again this morning, having already fallen by a third on Friday after it was reveled that massive losses at subsidiary HBOS threaten to bring the bank to its knees. Shares in the beleaguered bank fell as much as 22% in early trade Monday morning.
Lloyds only took over, sorry merged with, HBOS in January in a hastily arranged deal brokered by our very own knight in shining tartan armour Gordon McBroon.
What a pig-in-a-poke that is turning out to be.
Lloyds TSB Takeover Of HBOS In Jeopardy
Analysts said that Lloyds TSB shareholders were taking on a huge risk by buying HBOS and it would not be surprising if it once again tried to renegotiated better terms for the proposed takeover.
Monday's dramatic £37 billion cash injection into the banking system, orchestrated by Gordon Brown, has imposed "penal" terms on all the banks, especially Lloyds TSB.
Its shareholders have, for years, become accustomed to receiving generous dividends from the company. However, one of the conditions of receiving taxpayer money is that the banks cannot pay out dividends to their shareholders until the Government money has been repaid.
Those shareholders have every reason to feel they are getting a very unattractive deal.
The Treasury denied reports that it was making plans, behind the scenes, to step in and nationalise HBOS if Lloyds TSB walked away from the deal.
Your Money's Safe With Lloyds TSB
Crisis, what crisis? Lloyds TSB aren't aware of any problems judged on their extravagance at throwing a reputedly £2m private party recently at various venues across London.
According to the Sun (so it must be true), 1000 members of staff and their partners stayed in four of the capital's finest hotels and were treated with trips to Harrods and the London Eye.
They even hired aging pop quartet Duran Duran to play for them.
An organiser described the celebration as a “disgusting spectacle”. I'm not sure if he's referring to Simon Le Bon's performance, or the opulence and expense incurred.
“It’s the most extravagant corporate event I’ve ever seen,” said one. “There was little mention of the credit crunch as they filled their boots."
OK, the Currant Bun is probably exaggerating a bit here, but this sort of thing seems to summarise how out of touch with reality the management at these banks are.
And if Lloyds TSB have the money to buy HBOS what are they doing taking a handout from the government anyway?
HBOS Shares Hit New Low As Lloyds TSB Deal Hits Snags
Shares in HBOS fell to a new low Tuesday as rumours began to circulate that the recent Lloyds TSB rescue deal would not go through in its current form.
HBOS shares are around 10% lower this morning after falling 18% yesterday.
Edinburgh-based HBOS was on the brink of collapse two weeks ago until Prime Minister Gordon Brown personally intervened to broker a takeover by Lloyds TSB.
One high profile investor said: "There is something about this deal that has never quite hung together. It started to look potentially over-ambitious when analysts began to circulate very large numbers for the amount of additional capital that Lloyds TSB might need."
Some analysts are suggesting that Lloyds' management could use the ongoing financial crisis, and the subsequent further demise of HBOS shares, as an excuse to renegotiate the terms of the merger.
Moody's May Downgrade LLoyds TSB and HBOS
The merger between Lloyds TSB and HBOS, forms the UK's largest single financial services group with assests of more than a trillion pounds at June 2008.
Despite that however, Moody's hvae indicated that it will place it's ratings on both on review for a possible downgrade.
The merger of the two poses significant integration risks, says Moody's, and that there are still some difficult challenges ahead for the group.
Lloyds TSB profit slumps 63%, misses expectations
LONDON (MarketWatch) -- U.K. bank Lloyds TSB said Wednesday that its first-half net profit fell 63% after weak markets hurt investments at its insurance arm while impairment or "bad debt charges" surged in its wholesale and international business.
The group reported a net profit of 576 million pounds ($1.14 billion), compared to 1.54 billion pounds a year ago. Operating profit for the period was down 70% to 599 million pounds and fell well short of the 773 million pound consensus forecast.
Total impairment losses at the bank rose 31% to 1.1 billion pounds, mainly driven by the wholesale and international banking business, while the rise in U.K. retail impairments was a more modest 4%, reflecting the impact of lower house prices.
Lloyds said it expects U.K. house prices to fall between 10% and 15% in 2008 and that a decline in the middle of that range could add around 100 million pounds to impairment charges in the second half of the year.
Lloyds has a relatively small exposure to risky debt compared to some rivals and said write-downs on its portfolio of asset backed securities were 62 million pounds. It's also written-down 170 million pounds of payment protection it held with bond insurers.
Its insurance arm suffered from the market volatility over the last several months, leading to 505 million pounds of losses, mainly reflecting a fall in the valuation of its annuity portfolio.
Citi downgrades Lloyds TSB, sees UK recession
LONDON (MarketWatch) -- Citigroup downgraded British bank Lloyds TSB to hold from buy as it expects the U.K. to fall into a recession in the second half of 2008. It cut earnings estimates by at least 40% on Royal Bank of Scotland, Alliance & Leicester, HBOS and Barclays and retained sell ratings on HBOS and Barclays.
