HBOS merger with Lloyds approved as its bad debts soar
Shares fall 23% as bank sounds alarm over its loans
Saturday 13 December 2008
Halifax Bank of Scotland's bad debts and other charges have risen by two-thirds in two months as corporate and consumer loans buckle under economic pressure.
The banking giant, whose shareholders yesterday approved its takeover by Lloyds TSB, said its charges for bad debts and asset devaluations were £8bn for the year to 30 November, up from £4.8bn at the end of September. It also warned that more pain lay ahead, sending its shares down 23 per cent and hurting those of other British lenders. Shares in Lloyds fell by 18 per cent, RBS was down 15 per cent and Barclays lost 8 per cent.
HBOS, the UK's biggest mortgage lender, said the new losses would further reduce its capital ratios, although it had not yet quantified the deterioration. It added that the decline in credit quality across its client base had accelerated, and estimated that its assets had fallen sharply in value since November.
"Global market and economic conditions, the UK recession and increasing unemployment will continue to present a particularly challenging operating and credit environment," it said.
Bankers across the City say the worst could be yet to come as the financial crisis spreads throughout the economy. It is then expected to come back to haunt the banks through the money troubles of their customers. This means there is little scope for banks' business conditions to improve, and some expect a renewed round of emergency capital raising next year. "The [HBOS] news is bearish across the sector," said Alex Potter, an analyst at Collins Stewart.
HBOS said bad debts on its corporate loans almost doubled from £1.7bn to £3.3bn. Losses on the unit's investment portfolio also rose to £800m from £100m two months earlier.
Sharp declines in house prices and pressure on margins from interest rate cuts helped lift its impairments on mortgages from £400m to £700m, the bank said. The unsecured impairment charge rose from £800m to £1bn.
World's most lethal spider found under a bunch of bananas
Rumours that the star wants to move on to pastures new
TV presenter Fiona Bruce seemed a bit startled by the find during the filming of Antiques Roadshow
Comedian says he 'never laughed as hard as I have writing with Rik'
- 1 Jack the Ripper: Scientists who claims to have identified notorious killer has 'made serious DNA error'
- 2 Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
- 3 Star Wars memorabilia called a 'bit of plastic' by Antiques Roadshow's Fiona Bruce valued at £50,000
- 4 Meet Thea, Norway's 12-year-old child bride
- 5 Russell Brand might seem like a sexy revolutionary worth getting behind, but he will only fail his fans
Ebola outbreak: What is bushmeat – and is it to blame for the disease that has killed thousands?
Oscar Pistorius sentencing: Olympic star must serve 10 years, prosecutor urges
Isis fighters 'crucify' 17-year-old boy in Syria
Kentucky gang rape: 15-year-old boy left in critical condition after sexual attack by group at party
Oscar Pistorius sentence: Athlete's wealth and notoriety provoke an overdue debate on South African prisons
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Sorry Judy Finnigan – Ched Evans is no less sickening than an alleyway rapist
Residents should throw a street party and mix with immigrant neighbours, councils told
Workers 'could be forced to pay £5 a week' to get benefits
Russell Brand threatened with arrest after filming outside Fox News headquarters
Amal Alamuddin calls for the return of the Elgin Marbles from Britain: 'Injustice has persisted for too long'
iJobs Money & Business
£60,000 - £80,000: Saxton Leigh: Our client is an leading Asset Manager based...
£27000 - £32000 Per Annum: Clearwater People Solutions Ltd: Our large charity ...
£50000 - £55000 per annum + bonus + benefits: Ashdown Group: IT Relationship M...
Highly Attractive Salary : Austen Lloyd: NOTTINGHAM - BRILLIANT FIRM - You wil...