Monday, November 16, 2009

Lloyds bad debts

The FT looks at some of bad loans that Lloyds acquired from HBOS.

The development is a further sign of the fallout from the bank’s ill-fated acquisition of HBOS, made during the banking crisis.

At the end of last year, Lloyds took a £12.4bn impairment charge, mostly related to HBOS’s lending spree in commercial property. Lloyds took a further £13.4bn of impairments in the first half of this year, of which £9.7bn again related to HBOS’s corporate loan book.

However, Lloyds believes that will represent the peak of its impairment charges.

Lloyds is also Kenmore’s main lender and joint venture equity partner through its Uberior arm. The listed Kenmore European Industrial Fund is unaffected.

The Edinburgh-based investment and development property group was backed by Peter Cummings, who ran the corporate bank at HBOS. Largely as a result of his dealmaking, loans and advances in HBOS’s corporate division rose from £85.8bn in 2004 to £116.9bn by mid-2008.

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