Lloyds report €7bn in losses

Part-nationalised British lender Lloyds Banking Group slumped into the red last year with losses of £6.3bn (€7bn), it said today.

Part-nationalised British lender Lloyds Banking Group slumped into the red last year with losses of £6.3bn (€7bn), it said today.

Part-nationalised Lloyds Banking Group is expected to report more heavy losses when it takes its turn in the results spotlight today.

The group, which is 41% owned by the taxpayer, already announced that chief executive Eric Daniels gave up a potential £2.3m (€2.58m) bonus in an attempt to dampen public anger ahead of the results.

Analyst forecasts for pre-tax losses vary widely, given complications from the integration of the HBOS business, but the market is prepared for a multi-billion pound hit as the group continues to suffer in the financial crisis.

Fellow part-nationalised group Royal Bank of Scotland showed it was still £3.6bn (€4bn) in the red in 2009, although this was far better than the record £24.3bn (€27.3bn) deficit seen in 2008.

Unlike RBS, Lloyds managed to avoid the Government’s asset protection scheme which would have seen the public stake rise above 60%.

The firm instead garnered support for a record UK rights issue as part of a £20bn-plus (€22.5bn) fundraising completed in November, although bad debts are still likely to be a major millstone in the combined bank’s figures.

Bad debts are likely to be in sharp focus again today after Lloyds reported £13.4bn (€15bn) in impairments at the half-year stage due largely to reckless lending at HBOS.

But the group predicted on releasing the grim interim figures in August that the worst was over for bad debts.

RBS echoed this sentiment yesterday when it said that despite loan impairments rising by £660m (€742m), there were signs that conditions started to stabilise in the second half of the year.

While bonuses were a major issue for RBS, they may attract less attention for Lloyds, given that the group has little in the way of investment banking and following Mr Daniels’s decision to waive his windfall.

He was entitled to a maximum 225% of his £1.04m (€1.16m) salary due to his “significant individual contribution”, but will forgo a bonus for the second year in a row to stave off another row over bank pay.

The move came as he faced intense pressure to follow the lead of top bosses at Barclays last week, while RBS chief executive Stephen Hester also made the same move.

HSBC has yet to confirm reports that its chief executive Michael Geoghegan is also to take a pay cut.

Aside from its figures, Lloyds has also this week faced embarrassing news that it was the most complained about financial services company during the second half of 2009, according to the Financial Ombudsman Service (FOS).

FOS received 9,952 individual complaints about the group’s Lloyds TSB business during the six months to the end of December, although only half of these complaints were upheld.

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