HBOS announces £5.2bn writedown
by Gill Montia
Story link: HBOS announces £5.2bn writedown
HBOS has announced that it will be writing down a further £5.2 billion in bad debt.
The bank, which is in the process of merging with Lloyds TSB, has taken hits totalling £1.8 billion from collapses in the global banking sector since mid-September.
Losses have mounted from the bankruptcy of Lehman Brothers, the US regulator’s decision to sell Washington Mutual to JPMorgan Chase for £1 billion and the Icelandic banking meltdown.
The balance is made up of bad debt in the construction, real estate and corporate banking sector.
The impact of the writedown on Lloyds TSB’s proposed takeover of HBOS has been minimal, with both parties keen to pursue the merger against the possibility of a counter bid emerging from an international financial group, in the coming days.
The banks’ shareholders have yet to vote on the proposals, which involve a £17 billion fundraising that will be underwritten by the Government and could result in the taxpayer take a maximum 43% stake in the merged businesses.
Lloyds TSB has warned that profit will initially be hit by the acquisition but says it should resume dividend payments in 2009.
The bank has also announced that it expects to write down a further £300 million in credit crisis related losses, in the second half of 2008.
