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Lloyds take a £4.3 billion bath on Ireland loans

  • 18-12-2010 11:56am
    #1
    mike65
    Closed Accounts Posts: 88,972 ✭✭✭✭


    Ouch!
    The euro slumped to a two-week low against the dollar of about $1.3130, while sterling fell more than 1% against the dollar to $1.5454, its weakest since mid-September, after Lloyds' admission that it faced deeper losses in Ireland.

    Analysts were racing to downgrade their forecasts for Lloyds. Marc Smart at Citi estimated the market would expect Lloyds profits for 2010 to be £2.2bn, compared with previous estimates of £3.5bn. "Lloyds have just effectively announced a profit warning," Smart said.

    The banks shares, 42% owned by the taxpayer, slumped 3.5% to 66.5p but RBS was hit even harder, falling 5.7% to 37.8p, as its loan book in Ireland is twice as large as Lloyds and has not taken such severe impairment charges.

    Lloyds blamed a "further significant deterioration in market conditions in the Republic of Ireland" since its last trading update in November for the warning about the repayment prospects for its £26.7bn of Irish loans. They are the legacy of Bank of Scotland (Ireland) – which Lloyds inherited when it rescued HBOS at the height of the banking crisis in September 2008. It is now closing down the unit.

    The contagion of the Irish property bubble is going to act as a drag on the UK banking sector for years.


Comments

  • #2
    later12
    Closed Accounts Posts: 11,299 ✭✭✭✭later12


    The pace of deterioration at Lloyds is staggering. They have effectively lost a billion in a month. It's no surprise given their previous attraction to the riskier types of Irish mortgage lending through commercial property. You would have to agree they had it coming to them.

    Everyone talks about the RBS elephant but actually they're arguably in a better situation as they have a far higher % of private home mortgage lending that Lloyds on their Irish book.


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