Arab Today, arab today lloyds caps bad week for britain\s staterescued banks
Last Updated : GMT 08:53:10
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Arab Today, arab today

Lloyds caps bad week for Britain\'s state-rescued banks

Arab Today, arab today

Arab Today, arab today Lloyds caps bad week for Britain\'s state-rescued banks

London - AFP

Lloyds Banking Group on Friday capped a bad week for Britain\'s state-rescued lenders by announcing losses totalling billions of pounds due to huge compensation payouts and eurozone debt exposure. A day after Royal Bank of Scotland said its annual net losses had almost doubled, LBG reported that its loss after tax ballooned to £2.78 billion (3.27 billion euros, $4.38 billion) in 2011 from £320 million a year earlier. The part-nationalised banks have meanwhile warned investors to expect further troubles in 2012, increasing the likelihood that it could be some time before the government seeks to offload its huge stakes in the lenders. \"We expect income to be lower than in 2011 given the economic outlook,\" LBG said on Friday after the bank 40-percent owned by the British government also announced a pre-tax loss of £3.54 billion for last year. The results and guidance saw LBG shares lose 2.31 percent, the biggest loser on the day. Lloyds took a hit of £3.2 billion after being forced to compensate clients who were mis-sold payment protection insurance. British banks last year lost a high court appeal against tighter regulation of PPI, which provides insurance for consumers should they fail to meet repayments on a credit product such as loans, mortgages or payment cards. Stripping out the compensation payouts and other losses linked to the eurozone debt crisis, LBG\'s pre-tax profit rose by a fifth to £2.69 billion. \"The core business delivered a resilient performance,\" said LBG chief executive Antonio Horta-Osorio, who took a two-month break at the end of 2011 due to fatigue. That prompted the Portuguese national to decline his annual bonus amid British public outrage over excessive banking-sector pay at state-rescued banks. LBG on Friday said it had slashed its total bonus pool by 30 percent to £375 million compared with 2010. The bank meanwhile announced on Monday that it was clawing back some executive bonuses after LBG was hit by the PPI claims. Lloyds has slashed more than 40,000 posts since 2009 as it looks to nurse its way back to health after its part-nationalisation at the height of the global financial crisis. The lender, which was sunk by the ill-fated 2008 takeover of rival bank HBOS, is also cutting its international activities to 15 nations by 2014, compared with the current level of 30. LBG and Royal Bank of Scotland (RBS) \"are very much a work in progress and, for the moment, the outlook remains challenging,\" said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers. \"Obviously it is impossible to predict a timescale\" for the taxpayer to get its money back, he told AFP. \"The likelihood of either share price reaching \'breakeven\' point seems low in the short to medium term.\" LBG and RBS have together received a staggering £65 billion of British state money since 2008 yet are still suffering heavy losses. RBS on Thursday said that its net losses had widened to almost £2.0 billion in 2011, hit by the Greek debt crisis, restructuring costs and compensation payments linked to insurance mis-selling. The group suffered its fourth successive year of steep losses since it was bailed out by the British government at the height of the global financial crisis in 2008. RBS has also slashed tens of thousands of jobs since it was bailed out by the state and has also sought to offload non-core assets as it seeks to return to profitability. Chief executive Stephen Hester told reporters on Thursday: \"Our job is to diffuse the biggest-ever time bomb in banking balance sheets. In this respect, we are making progress.\" Hester bowed to public anger last month and waived his annual bonus of shares worth £963,000, which was on top of his £1.2-million salary. RBS is 82-percent owned by the government.  

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