Lloyds ‘cautious’ over Irish loan book

LLOYDS Bank, which has announced plans to cut 750 jobs as it pulls out ofretail banking in Ireland represented by the Halifax brand, said it is still cautious on its Irish loan book due to uncertainty over the outlook for the Irish economy.

The group, which owns Bank of Scotland (Ireland), said losses on Irish loans jumped to a massive £2.9 billion (€3.3bn) in 2009 from £526 million the previous year.

That amounts to almost 10% of gross loans in Ireland and compares with just 3.4% at the end of June.

NCB Stockbrokers said in a note that one third of all of the bank’s Irish loans are now impaired.

The group expressed “ongoing concerns with regard to the outlook for the Irish economy although we expect 2009 to have been the peak for the international impairment charge”.

While it expects total impairments this year and next to fall it remains “cautious on the Irish portfolios”.

The bank decided to close its Irish retail division following a review that found Halifax was too small to survive as a result of the financial crisis and recession.

It intends to retain its commercial operations in Ireland.

Since that decision was taken it has opened up the personal loan, credit card and deposit books at Halifax to interested buyers. It plans to have the division closed down by June of this year.

Buyers have been provided with details of close to €1bn in fixed-term and demand deposits and balances in more than 50,000 current accounts at Halifax.

The majority of the €10bn loan book comprises home loans and residential investment mortgages that will be held to maturity by the bank.

The bank said Irish commercial property values have slumped by over 50% and house prices by over 25% from their peak.

Gross loans and advances to Irish customers fell to £29.1bn from £31.4bn in 2008 while customer deposits fell 15% to £29bn.