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HBOS losses taken on by tax payers rise to 50%
Shares in the Lloyds banking group dropped by 8 per cent to 1.04p after it disclosed the amount of outstanding bad debts it bought from HBOS when it took over its books.
The tax payer owns 44 per cent of Lloyds and the latest figure suggests and the write offs will add up to a 50 per cent increase on the 2008 write down figure.
The chief executive of Lloyds, Eric Daniels said that there were a number of reasons why it had seen a “significant rise in impairment levels in its lending portfolios” including the defaults on loans previously taken out by now struggling property developers through HBOS. Last month Lloyds joined the Government Asset Protection Scheme and it will now transfer £260 billion worth of its higher risk loans to the Government, the bank will take the hit on the first £25 billion worth of bad debts and the rest will be taken on by the taxpayer.
Lloyds announced that its integration with HBOS and said that it had made £150 million worth of cost savings and said it would meet its 2011 target of £1.5 billion.
Barclays Bank also announced a rise in bad debts during this year’s first quarter although it had seen an increase in growth for its investment bank which had seen a rise in profits to £1.19 billion amounting to a comfortable offset against its loses in other departments. Barclays shares rose 4 per cent.
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