Anger at Lloyds over Daniels's profits confusion

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The Independent Online

City fund managers have rounded on Lloyds Banking's chief executive, Eric Daniels, for delivering a confused picture of the bank's finances.

Mr Daniels surprised investors at the weekend by telling them that the bank would, after all, be profitable in 2010, just three weeks after reporting full year figures for 2009. Shares in Lloyds surged by more than 8 per cent on Friday.

The bank could again surprise the market this week if it offloads its stake in St James's Place Capital, whose share price closed at 250p last week, valuing it at more than £1.2bn.

Mr Daniels left investors in the dark last month when he refused to say if the bank could end its losing streak this year. One senior fund manager who sold a stake in Lloyds after the full-year report said: "I know Daniels isn't a cheery character at the best of times but clearly he should have been more upbeat at last month's results presentation. Please explain to me what the hell has changed in the three weeks since the results?"

Another, who still holds the stock, said: "Mr Daniels needs to be careful. These numbers have been underplayed. I know the Government owns a large stake but there are plenty of City firms with an interest in Lloyds. This leaves a bad taste."

Lloyds is believed to be ready to place in the market some or all of its 60 per cent stake in St James's Place. The FTSE-250 listed wealth manager posted a 2009 operating profit of £228.9m last month, about £30m ahead of analysts' expectations. The group, run by its chief executive, David Bellamy, manages more than £17bn worth of assets.

Both St James's and Lloyds' management have made no secret of their keenness for an amicable separation. A sell off would help Lloyds bolster its capital reserve ratio. The placing of Lloyds' stake in the market would come as management finalises plans to spin off some of its property assets into a Real Estate Investment Trust.

In order to adhere to EU rules governing state aid, Lloyds is also looking to sell off a host of other assets including it's Cheltenham & Gloucester brand.

A Lloyds spokesman said: "We take our market obligations seriously and we are confident they were applied correctly on this occasion." He declined to comment on a possible share placing of St James's Place Capital.

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