Lloyds Unit Posts Huge Loss
Saturday, February 28, 2009; Page D06
LONDON, Feb. 27 -- Lloyds Banking Group said Friday that HBOS, the mortgage lender it acquired last month, lost 7.58 billion pounds, more than $11 billion, in 2008, a second blow to the British banking industry following Thursday's historic losses reported by the Royal Bank of Scotland.
The Lloyds takeover of the troubled Halifax/Bank of Scotland was backed by the government in an effort to prevent a potential HBOS failure from slamming the British economy, which was already reeling in the midst of the global financial crisis.
Lloyds Banking Group is 43 percent owned by British taxpayers after a $24 billion government bailout last year.
The group separately reported results for its healthier Lloyds Bank TSB, whose profit fell 80 percent, to $1.19 billion.
"Against a backdrop of recession and an ongoing global financial crisis, we expect 2009 to be another challenging year," Lloyds Group chief executive Eric Daniels said.
Lloyds did not announce that it would participate in the British asset protection program, despite widespread expectations among analysts that it would take advantage of that government insurance effort.
The Royal Bank of Scotland on Thursday sought protection for $463 billion in toxic assets through the program, which is similar to a "bad bank" scenario in which an institution can separate its performing assets from toxic ones.
Lloyds had been expected to seek protection for up to $354 billion of non-performing assets. Lloyds and officials from the British treasury were reportedly still in negotiations Friday over the group's participation in the program.