Mountain of bad debt leaves Lloyds £6.3bn in red again

Part-nationalised lender cuts losses by 6% but refuses to reveal bonuses

A mountain of bad debts forced Lloyds Banking Group to announce annual losses of £6.3bn yesterday – but the part-nationalised bank refused to reveal details of its net lending or bonuses for bankers.

The deficit, which was 6 per cent lower than the £6.7bn loss reported in 2008, was caused largely by bad loans and charges stemming from its takeover of struggling rival Halifax-Bank of Scotland. These impairments soared by £9bn to £24bn, largely as a result of the loans that HBoS granted to commercial property ventures just before the bottom fell out of the market as the banking crisis struck in 2008.

However, the Lloyds chief executive, Eric Daniels, insisted the bad debts had peaked. He said overall losses on such loans had fallen by 21 per cent between the first and second halves of the year, although they rose slightly between the third and fourth quarters.

Lloyds's refusal to reveal details of its net lending and staff bonuses contrasts with other state-backed banks. Net lending is a particularly important indicator when assessing whether Lloyds has the met business lending targets that were set when the Government took a 41 per cent stake in the bank and told it to keep credit flowing during the recession.

Yesterday, Lloyds would say only that it had made available £70bn for business loans and mortgages. About half of that went to retail clients, with £10bn for small businesses and £25bn to corporate customers. On Thursday, Lloyds's part-nationalised rival Royal Bank of Scotland said that, even though it loaned £80bn during the year, its net lending was negative because borrowers were paying off their debts. Lloyds is unlikely to meet its target for lending to businesses.

Mr Daniels has already said he will give up a £2.3m bonus to stave off another row over bankers' pay. Lloyds, which does not have a large investment banking business, is expected to hand out much less in bonuses than the £1.6bn on offer at RBS.

The chairman, Win Bischoff, said he expected Lloyds to pay between £10m and £20m to the Treasury as a one-off "supertax" on bonuses. He said staff should feel able to take their bonuses, adding: "We must find a way whereby remuneration models are agreed and voted on by shareholders without executives being put in a position where they feel they have to waive their rewards."

He denied Mr Daniels had come under pressure to give up his windfall following similar moves at Barclays last week by its chief executive, John Varley, and president, Bob Diamond.

Mr Daniels, meanwhile, said he felt "no embarrassment" that £20bn of taxpayers' money had been pumped directly into Lloyds, together with the billions more in indirect aid and economic stimulus packages intended to keep struggling lenders afloat.

Lloyds's share price fell by 2.4p to 52.5p after yesterday's results, keeping the taxpayer's stake well under water. The Government paid an average of 74.35p for each of its 27 million shares, leaving it with a paper loss of about £5.9bn.

Mr Daniels he had raised his target for cost savings from £1.5bn a year to £2bn a year, but it was not immediately clear if this would require further job cuts. Headcount has already fallen from 120,826 to 107,144 during 2009.

Nic Clarke, an analyst at Charles Stanley, said: "Many shareholders who have held Lloyds shares for a number of years might not agree with the view of Mr Daniels that 2009 has been a success for Lloyds. Although the decision to purchase HBoS is now history, the acquisition is still having a big impact on the results."

Paying HBoS shareholders about half what that bank was worth last year meant Lloyds was able to report a statutory pre-tax profit of £1bn.

On Monday, HSBC will be the last big bank to report results for 2009. It has not said whether its chief executive, Michael Geoghegan, will take a bonus.

PROMOTED VIDEO
Arts and Entertainment
glastonbury
News
i100
Arts and Entertainment
Shock of the news: Jake Gyllenhaal in ‘Nightcrawler’
filmReview: Gyllenhaal, in one of his finest performances, is funny, engaging and sinister all at once
Arts and Entertainment
Shelley Duvall stars in Stanley Kubrick's The Shining
filmCritic Kaleem Aftab picks his favourites for Halloween
Life and Style
Taste the difference: Nell Frizzell tucks into a fry-up in Jesse's cafe in east London
food + drinkHow a bike accident left one woman living in a distorted world in which spices smell of old socks and muesli tastes like pork fat
Arts and Entertainment
Kit Harington has been given a huge pay rise to extend his contract as Jon Snow in Game of Thrones
tv
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Luke Shaw’s performance in the derby will be key to how his Manchester United side get on
footballBeating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Life and Style
Google's doodle celebrating Halloween 2014
tech
Arts and Entertainment
Don’t send in the clowns: masks and make-up conceal true facial expressions, thwarting our instinct to read people’s minds through their faces, as seen in ‘It’
filmThis Halloween, we ask what makes Ouija boards, demon dolls, and evil clowns so frightening?
News
peopleFarage challenges 'liberally biased' comedians to 'call him a narcissist'
Arts and Entertainment
Liam and Zayn of One Direction play with a chimpanzee on the set of their new video for 'Steal My Girl'
music
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Finance Assistant - Part time - 9 month FTC

£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...

Marketing Manager

£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...

Market Risk Manager - Investment Banking - Mandarin Speaker

£45,000 - £65,000: Saxton Leigh: Our client is a well-known APAC Corporate and...

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Day In a Page

The drugs revolution starts now as MPs agree its high time for change

The drugs revolution starts now as MPs agree its high time for change

Commons debate highlights growing cross-party consensus on softening UK drugs legislation, unchanged for 43 years
The camera is turned on tabloid editors in Richard Peppiatt's 'One Rogue Reporter'

Gotcha! The camera is turned on tabloid editors

Hugh Grant says Richard Peppiatt's 'One Rogue Reporter' documentary will highlight issues raised by Leveson
Fall of the Berlin Wall: It was thanks to Mikhail Gorbachev that this symbol of division fell

Fall of the Berlin Wall

It was thanks to Gorbachev that this symbol of division fell
Halloween 2014: What makes Ouija boards, demon dolls, and evil clowns so frightening?

What makes ouija boards and demon dolls scary?

Ouija boards, demon dolls, evil children and clowns are all classic tropes of horror, and this year’s Halloween releases feature them all. What makes them so frightening, decade after decade?
A safari in modern Britain: Rose Rouse reveals how her four-year tour of Harlesden taught her as much about the UK as it did about NW10

Rose Rouse's safari in modern Britain

Rouse decided to walk and talk with as many different people as possible in her neighbourhood of Harlesden and her experiences have been published in a new book
Welcome to my world of no smell and odd tastes: How a bike accident left one woman living with unwanted food mash-ups

'My world of no smell and odd tastes'

A head injury from a bicycle accident had the surprising effect of robbing Nell Frizzell of two of her senses

Matt Parker is proud of his square roots

The "stand-up mathematician" is using comedy nights to preach maths to big audiences
Paul Scholes column: Beating Manchester City is vital part of life at Manchester United. This is first major test for Luke Shaw, Angel Di Maria and Radamel Falcao – it’s not a game to lose

Paul Scholes column

Beating City is vital part of life at United. This is first major test for Shaw, Di Maria and Falcao – it’s not a game to lose
Frank Warren: Call me an old git, but I just can't see that there's a place for women’s boxing

Frank Warren column

Call me an old git, but I just can't see that there's a place for women’s boxing
Adrian Heath interview: Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room

Adrian Heath's American dream...

Former Everton striker prepares his Orlando City side for the MLS - and having Kaka in the dressing room
Simon Hart: Manchester City will rise again but they need to change their attitude

Manchester City will rise again but they need to change their attitude

Manuel Pellegrini’s side are too good to fail and derby allows them to start again, says Simon Hart
Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes