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Lloyds and HBOS humbled

Robert Peston | 14:46 UK time, Friday, 13 February 2009

The profits warning just released by Lloyds is shocking.

The loss at HBOS - which is a fraction under £11bn - represents a new record loss for a British bank (if goodwill write-offs are excluded, to be boringly technical for a second).

The HBOS headquarters on the Mound in Edinburgh - David Cheskin/PA WireLloyds says that on a statutory basis HBOS - which it bought earlier this year - lost £10bn in 2008 plus a so-called policyholder charge of £0.9bn (so just under £11bn altogether).

And on a statutory basis, the profit for Lloyds was was just under £1bn last year.

So on a merged basis for the two banks together, the result for 2008 would have been around £10bn.

Which is enough to turn most bankers white, even those hardened by the battles of the past 18 months.

What generated the colossal loss at HBOS was, to a large extent, eye-watering charges of £7bn on corporate loans that have gone bad - in part reflecting the recession we're in.

But Lloyds says that the loss on loans to companies is also the result of Lloyds applying its more conservative accounting standards to HBOS's loan book - which is one serious kick in the tender parts for HBOS's previous executives.

HBOS also suffered the indignity of incurring further big losses on its holdings of assorted dodgy investments.

It is a terrible humiliation for HBOS's already bashed-up previous chief executives, Andy Hornby and Sir James Crosby.

And it's pretty embarrassing - to put it mildly - for Lloyds' chief executive, Eric Daniels.

Lloyds didn't have to buy enfeebled HBOS - even though the government encouraged it to do so.

And only this week, Daniels insisted that, in time, Lloyds would make good money from the takeover.

This afternoon's horrible fall in Lloyds' share price is investors having serious doubts about whether Lloyds was right to buy HBOS.

Daniels will hope that those investors don't start to have serious doubts about whether he is the right man to attempt to rebuild a bank that many would say has been seriously weakened by the acquisition of HBOS.


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  • Comment number 1.

    I don't want to say 'I told you so..' but, er, 'I told you so...'

    Absolutely tragic that they couldn't have the cojones to walk away from this liability...

  • Comment number 2.

    Bye bye HBOS, bye bye........

    The Governments insistance on refusing to admit to full and total nationalisation is likely to bring Lloyds down too.

    No bank can absorb that kind of merger - and it's not like the market was right for the takeover to begin with.

    I give it 18 months and then Lloyds-BOS will be in Government hands.

    then it will be bye, bye Daniels, bye,bye...

    I wonder who will 'advise' the Government out of this mess? Milton Friedman I wonder??

  • Comment number 3.

    And the point surely was that even if HBoS had been 'given away' for a pound, it would still have looked very expensive given the 'black hole' in its balance sheet - and the fact that they were willing to give HBoS shareholders a swap of Lloyds shares for this worthless crock is nothing short of corporate malfeasance.

    But when many many institutions owned shares in both companies, they were never going to act in Lloyds best interests, and the Top Management at Lloyds have failed in their fiduciary duty to the shareholders.

    This is going to go the way of RBS if they are not very careful - but at least they managed to delay this news until AFTER the Treasury Select Committee, so that Daniels avoided getting the kicking that Hornby et al got...

  • Comment number 4.

    Is there no end to the stupidity of these bankers?

    In what other industry/profession would the terminally clueless get such big bonuses?

  • Comment number 5.

    If I buy a race horse and bet on it and it wins, I win big time - Race Winnings and Bet Winnings

    If it's a donkey I lose big time - Cost of feeding, shoeing, training and betting loses

    Did HBOS not notice there was a double upside AND a double down side to Leading and Investing in the same companies?

    Or did they seriously think they could indefinately inflate their own market?

  • Comment number 6.

    There must be a lot more of this bad news to come. Unless the world's leaders face up to the essential insolvency of most banks,this problem can only fester.

    It is the absence of political leadership which is now the problem.

    rob Killick

  • Comment number 7.

    i still do not understand why lloyds allowed themselves to be bounced into taking over no way is it in the shareholders interest, so is the board in dereliction of its fiduciary duty?

  • Comment number 8.

    HBOS is twice the size of Lloyds and is riddled with bad debts. That much was known before the merger went ahead. Lloyds, as a more conservative lender, should have stayed well clear of HBOS, rather than buying the thing.....
    Lloyds was a respectable bank, and I feel sorry for its shareholders who have lost out in this merger.

    The fact that many of the disgraced senior bankers have no banking qualifications is truly alarming. If they had any honour, they would fall upon their swords. There are too many players and not enough gentlemen left in the City.

    A robust banking and insurance industry is vital for Britain's wealth and stability. To allow retail banks to borrow cheap money from abroad was a very bad decision, and needs to be reversed. In future, the bankers must be protected from themselves, by adequate legislation.

  • Comment number 9.

    this is relevant news mr peston and im glad to see the negativeness of your blogs is going to the right places.

    lloyds i beleive made a massive error of judgement in buying hbos.

    daniels probably wouldnt like to agree but its true.

    although not quite as expensive as RBS buying abn amro(again how barclays were lucky on that one!!)

    the purchase of hbos will prove just as damaging for lloyds.

  • Comment number 10.

    In light of what you've reported, nobody can tell me there isn't a prima facie case for someone having made misleading statements here - potentially a criminal offence.

    Why can't we pursue this with the vigour they do in the USA ? (24 years in chokey !)

  • Comment number 11.

    (cosmic vibration or psychic reading)
    Conceit and intellectual pride.
    Being stuck in a problem which has no apparent solution.
    Frustration and anxiety that are left unsettled.

  • Comment number 12.

    Indeed Mr Daniels needn't have bought HBoS.

    But the real question to which the answer should be pusued now is whether Brown or the FSA (i.e. Crosby) not just persuaded Lloyds but put pressure on it to buy HBoS.

    The fact that competition rules would not apply to the merged entity points towards pressure on Lloyds, or at least the maximum amount of facilitation.

    It seems the Mr Moore got it very right, and not for the wrong reason as some seemed to imply yesterday. It wasn't the reliance on wholesale funding, it was dodgy underwriting that brought HBoS down, risk appetite was just too big.

    The lender of last resort has imploded. A bad asset bank or larger asset protection scheme will now be needed to prevent privatisation.

  • Comment number 13.

    Humbled yes but I look forward to the first prosecutions related to all this.

    It's time the people in charge of the banks suffered some serious consequences rather than ringing their hands in public then going back to their nice houses and comfortable lives.

  • Comment number 14.

    If it's a "terrible embarrassment" for Crosby, what is it for Gordon Brown? Not only did he put this guy on the Board of FSA, but Brown was also very explicit in the part he played in brokering the Lloyds/HBOS acquisition. If Crosby's judgement has been further shown to be flawed, it must surely say very much the same thing about Brown.

    I've shied away from saying "Brown must go", as it's very easy to say but not easy to suggest who/what replaces him. We're not exactly awash with political talent. However, Brown now shows such a catalogue of personal failure that someone not assocaited with oversight of the financial services industry (part of Brown's remit as Chancellor) needs to be in No 10 now. Otherwise we end up with every decision/revelation being measured against "what Brown knew", instead of its wider economic implications.

    Brown is now the story, and I hope his colleagues show a bit more spine than they did when Blair became a liability but they didn't have the nerve to push him out quickly.

  • Comment number 15.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 16.

    Let's face it Robert, they're all bankrupt or teetering.
    Probably not one of them could survive without the taxpayer guarantees against their bad debts and dodgy dealings.
    Even those unaffected so far may need help.
    It's a major event.
    Worse than 1930?
    Well, very few people owned or mortgaged their homes in 1930, now we all do.

  • Comment number 17.

    "embarrassing" ?

    Millions of people would just love o be embarrassed for a £1m salary and a similar amount of annual bonuses.

    Stalin once said "A single death is a tragedy, a million is a statistics".

    Steal from one person and you get to go to jail for a few years. Swindle from a few million people and ruin their lives get you retirement in luxury.

    Examples, examples, examples ...

  • Comment number 18.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 19.

    Are they still planning on paying bonus? Sir James Crosby was involved with FSA so he will be one of those setting up regulation (or tearing it up).

    As it said if he was the man advising Brown, its freighting to think were the country is in.

  • Comment number 20.

    SO can I as a LLoyds shareholder sue Daniels or as an HBOS shareholder sue Hornby, for latter extracted cash from me as they strove to raise £4 Billion last year claiming that that would solve their problems, and Daniels told me that Llloyds was a conservatively run bank, then against my wishes, bought HBOS a basket case, possibly because he owed Gordon Brown a favour, or worse, wanted one, and has lost me over 80% of my savings in the process!

  • Comment number 21.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 22.

    Brilliant. What a Tax Avoidance scam - declare a loss and no Corporation Tax to pay.

    HBOS has done it again. What next?

    So another incentive for HMG to scrutinise Banks more closely in future.

    That's an idea - put HM Revenue Inspectors on the non-executive Boards of the Banks - that will raise their stress levels.

    After all, that's only fair as small businesses always have the Revenue snooping on them.

  • Comment number 23.

    Why is everybody surprised, you know it was coming hence the takeover. Lloyds TSB's reputation is well known in the commercial market. There will be clawbacks in the years to come compensating for the over-provisions. As usual the stock amrket runs for cover. No surprise there!!
    Go on Mr Peston keep talking everything down, when it hits the bottom will your salary be affected. Probably not!!

  • Comment number 24.

    The HBoS profit warning implies 5.5 billion pounds more losses than already anticipated in December, of which 3.7 bn extra on the loan protfolio. This also demonstrates that the dodgy assets are predominantly outside the US, so this one like many others can not be blamed on the land of Obama!

    It does indicate that the auditing company that reviewed Mr Moore's dismissal from HBoS at the time, KPMG, might have been prejudiced, only ever so slightly, as it also was the HBoS auditor and was paid 11 miilion fees.

    Not me guv indeed!

  • Comment number 25.

    I rather think you need to recall the circumstances of that Lloyds takeover - they'd just attempted to help Northern Rock out during the Virgin Oliphant war, and were obvious white knights, so they could hardly refuse when the Dahling came begging, even though it has no match to their policies of non-expansion overseas.

    I was suggesting earlier that there are legal constraints on the government from the Fundamental Rights charter. Those may well come into play here.

  • Comment number 26.

    I note with interest (ahem) that the loss is roughly half the profits announced in 2007.

    Has anyone seen any analysis of banks pretax profits for (say) the last three years against losses incurred in the banking crisis?

    I suspect the profits announced over that time scale would far outweigh the losses incurred thus far. Given they do, what happened to those profits? Were they real?

  • Comment number 27.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 28.

    No surprise.


  • Comment number 29.

    What are the real bad debt losses as opposed to applying more conservative accounting standards.

    Simple example: if HBOS lent £10million and loan is not recoverable because customer bust then that is a real loss of £10million. If customer is struggling and behind on payments but still paying and accountants write the loan down by 50% then that constitutes a £5m loss but it is not real - if the customer still exists and is trying pay the actual loss may be £10m or zero the bank will not known until months or years later.

    What I would be worried about is the level of real losses first and then proper detail about the accounting treatment

  • Comment number 30.

    Lloyds was the best run most conservative bank in the UK with unparalled domestic support.

    But there seems to be a case now of pressure to grab the big one at a discouint without necessarily doing a full due dilligence. What purpose Andy Hornby is still there for on £60 per month beggars belief.

    This looks like a classic case of Victor Blank putting ego before common sense. He should resign asap.

    It is absolute insanity that those who screwed up are still assumed to be the best people to sort out problems.

    The reason President Obama is now president is that the USA realised Bush could not cut teh mustard and had to go.

    So it is now fair to say that whilst Prime Minister Brown maintains total denial for any wrong doing even though every arrow points to him directly and Mr Blair. No progress will be made until he clears his desk and lets the new incumbent get on and sort out his mess.

    Such action must take place at all the UK banks with no compensation or huge pensions offerd either.

    You can't claim the party is over but still have the same people gulping down drinks and freebies.

    Go now Prime Minister Brown and give us all some peace. So we can try to build a new basis.

  • Comment number 31.

    So Robert, if we have £7 billion of Corp lending losses and a big number on Dodgy investments how much of the £11bn do we have in actual man in the street loosing his house losses ?

    It doesn't sound as if they have taken a bath on that number and as the BBC is more than happy to "shock and awe" with bad news I wonder if there is some "OK" news buried in there somewhere ?

  • Comment number 32.

    "It is a terrible humiliation for HBOS's already bashed-up previous chief executives, Andy Hornby and Sir James Crosby. "

    Perhaps the reason a man who has done nothing wrong allegedly suddenly resigns.....

    I wonder if the knighthood for services to banking should be returned too.

  • Comment number 33.

    This rolling collapse reminds me of Germinal, by Emile Zola. Every time the starving coal miners of Le Voreux thought that their brutal, harsh lives could not possibly get worse, things did spectacularly worse.

    I am tired of the banks being forgiven by the Government - bailed out by us - and zillions of taxpayers' pounds disappearing. Time for a debt jubilee for the rest of us, too, please.

  • Comment number 34.

    Obviously bad news but the real question is to what extent Lloyds have followed the usual process of throwing the kitchen sink into the write downs. If they have I would make no criticism. If they have not - and further write downs emerge - then Daniels will have to go. If this is a true statement of the position then it will hit the shares short-medium term but will enable real value to be demonstrated longer term (2-3 years). I guess the perspective for shareholders depends on their time frame. What worries me most is the reaction to the announcement - it is only shocking (to quote la Peston) if this has not cleaned the stables. I know it is not a direct parallel but if you want an example of normal corporate practice on takeovers just look at the reserve strengthenings RBS put in at Churchill when they took it over. In relation to takeover value it was on a similar scale and done to protect future years.

  • Comment number 35.

    I think that the "owners" confidence in Lloyds group is finally showing. By the owners I refer to not only the goverment, but those of us who have banked with the group for years, helping to put them in the position they were before this fiasco started.
    I have shifted the majority of my monies out, believe me it took nearly 3 months to do it, 3 months. Despite constant phone calls and internet contact it required a visit to the uk to do this personally, so much for telephone and internet banking. Lloyds Tsb as they were then could not even cope with a simple change of address for me.
    I was lied to, given poor advice, ignored when asked for staff to contact me, and then they wanted to charge me for giving me my money.

    After the fiasco of HBOS and the government "enquiry" i have no faith in them looking after my remaining money.
    The rest of it is coming out and going into a bank where they talk face to face and tell you up front what the charges are.

    Honesty and accessibility.
    Remember we own our money, we are customers who can vote with their funds, and take our money where we want to.

    Bring back the "good old days of banking" where there was continuity of staff, respect and courtesy. Not todays ways of new staff every couple of months, who don't care as long as they get inline for their bonuses.

  • Comment number 36.

    Note that Lloyds had already stated on 4th November 2008:

    "In a technical accounting move, Lloyds TSB also said it planned to write down assets held by takeover target HBOS by up to £10bn as it takes a more stringent view of its target's asset portfolio. However, Lloyds said this would be largely offset by positive adjustments on debt carried."

    Do you or your contacts know whether there is a positive adjustment on debt?

  • Comment number 37.

    Yep - bad purchase - a bit like RBS buying ABN. I could never understand the logic of teh purchase when no-one really knew what was lurking in HBOS (or LLoyds) and it slapped the face of better competition for the consumer.

    Daniels has to go as his judgement is questionable.

    The 'Government' took a knee-jerk reaction to a situation and ,ay. in doing so, have made things usual.

    This will not be the last of the 'horrendous' results

  • Comment number 38.

    Your blog on Wednesday:

    "So no-one in their right mind would argue that Moore got it wrong in respect of the big issue - though Moore's critique was not that funding would dry up, but that borrowers would have difficulty repaying"

    and your blog today:

    "eye-watering charges of £7bn on corporate loans that have gone bad"

    Seems Mr Moore hit the bulls eye. And as anyone who has worked in a big corporate knows, coming up with a well argued report criticising the Boards strategy is the fastest guaranteed way to pick up a redundancy cheque.

  • Comment number 39.

    I was very surprised by how easily the merger went through at the Lloyds TSB shareholder vote. It seemed pretty obvious to me that the deal was being forced through by the Government because they knew that HBOS was in a terrible state. Remember that this was before the banking sector bail-out.

    Ironically, was it not for the merger Lloyds TSB would be profitable and still be fully independent. One has to wonder what effect this will have on the obviously troubled relationship between the banks and Brown/Darling. Did the government know more about HBOS's terrible position than Lloyds TSB did? My suspicious side says 'yes', and that Brown and Darling let Lloyds TSB take the hit in an attempt to avoid another Northern Rock debacle.

  • Comment number 40.

    "Shares in Lloyds - 43% owned by the government - fell by as much as 40% on investor shock at the latest forecast. "

    Does that mean that we as a tax payer lost 40% of our share price at that point ?

    I still think banks have not fully disclosed the extent of their bad debts.

  • Comment number 41.

    I imagine that most small shareholders in Lloyds voted, like me, against the HBOS acquisition. With no-one able to fathom the depth and the detail of the mess HBOS was in the Lloyds proposal seemed mad. Much better to wait for it to fail. But presumably the institutional shareholders took a different view. What did those clever guys think they knew? They are employed by the institutions that "safeguard" the pensions and savings of we unsophisticated laymen and women. I don't expect miracles from them but it would be nice to feel that, because of how little was known of the detail, they could have stopped Lloyds doing something so foolish. Stupid bank management supported by stupid institutional shareholders - the rot is everywhere!

  • Comment number 42.

    Sadly I believe it is time for Mr Daniels and Sir Victor Blank to depart. They have either been sold a pup by HMG or their over-weaning appetite has seen them unable to recognise the frailities of what they were purchasing when it was before their eyes.

    I voted in favour of the takeover - despite severe personal reservations - as a vote of confidence in Mr Daniels in particular. I now feel let very let down and have no confidence in him whatsoever.

    As Sir Victor and his non-execs clearly failed to rein in the ambitions of Mr Daniels and provide the necessary challenges to the reported outcomes of the due diligence, his sword needs to bge fallen upon as well.

    Only two days ago Mr Daniels said HBOS losses were within the margins they had anticipated. How come two days later they are significantly ahead of those discussed?

  • Comment number 43.

    Yet another revelation to hammer home the conviction that the general public have that the banking system has been in the hands of a number of unqualified, power and money greedy directors not fit for purpose. It's time to clear away all this deadwood appointed by the 'old boys' network and replace them with true professionals with 'Chartered' qualifications. How do we get rid of them? Start withdrawing our savings and investments until they resign or are sacked by the Government or shareholder?

  • Comment number 44.

    As a new contributer, does moderation always take this long? First post at 2:55 not viewable yet an hour later?

  • Comment number 45.

    Considering these massive losses, why is the prime architect of HBOS's destruction, Andy Hornby, still being paid £60,000 PER MONTH (or £720,000 per year), as a consultant by Lloyds?

    It seems to me that this is outrageous and another example of the sickening old-boys culture of the City and financial institutions.

  • Comment number 46.

    HBOS may have been worthless, but Daniels only saw an increase in market share that would avoid the attentions of the MMC thanks to his chum, Gordon.

    Maybe he is right and did not see the need for due diligence to back his gut instinct. The point is, this is another example of gambling by executives.

    The gamble is for the shareholders and the country, but not for him. For Daniels, he is a hero if his gut instinct is right. If he fails there is no downside.

    Perhaps we have to revise the terms of a Limited Company to make directors personally liable to the point where they can only retain £250k of personal wealth.

  • Comment number 47.

    It really does not matter how you present it this is smack in the mouth for Lloyds

    a) HBOS was a dog of a buy (certainly as good as ABN AMRO )
    b) the share price reflects the sensitivity of the markets (and they would have be harsh even in the best of times)
    c) what happened to due diligence on the takeover - was this not clear, especially if more rigerous accounting standards were applied by Lloyds in comparison to HBOS
    d) or were they pushed into this ?

    The games afoot as they used to say ..

  • Comment number 48.

    As I've said before, Lloyds shareholders have paid a heavy price for the PM's Glenrothes by-election strategy.

    However, the FSA played a big part in encouraging and approving this disastrous merger. It's also clear though that the integrity of the FSA was fatally compromised by the presence of Crosby. He presumably, through a pension fund at least, MAY have had a fiduciary interest in HBOS not going to the wall. This should be clarified.

    I envisage lawsuits from disgruntled shareholders which will make the Equitable Life saga look trivial by comparison.

  • Comment number 49.

    across the pond, similar rumblings....

    Peace and Living within our means

  • Comment number 50.

    PS None of this surprises me in the least!

  • Comment number 51.

    Someone wake the moderator up!!!

    47 comments and 1 hour later!!

  • Comment number 52.

    PPS Can Lloyds at least sack Hornby from his "consultancy" now.

  • Comment number 53.

    If we were to leave aside, for the moment, the obvious adjectives such as "parasitic" or "greedy" , which are certainly in the top ten most used sentiments , it is apparent that we do not have ANY

    competent management in our financial institutions --- and the present incumbents have no intention of getting their snouts out of the trough.

    Why can't we let these 1st division---ha, ha, --players go play on their own with their own and their sycophant's money -- and see a new Banking Facility set up in every high street with services aimed specifically at the plebs and small private companies; OK so some may call this nationalisation-- what is so wrong with that when we have all seen the results of unchecked greed in the big international institutions -- a little genuine competition from a decently run high street operation with no axe to grind such as selling insurance or "special"services may be good for everyone except the current plonkers.

    This would surely be no more costly to set up than the current tidal flow of our money going who knows where ?

  • Comment number 54.

    November 2007, Tried to transfer £10k from an Iteligent Finance account (a bank owned by Halifax). Kept trying but couldnt get it. The Phone call revealed that they would only allow £2k of my money to be released, after some argument they allowed me to make 2 withdrawls of £5K on 2 seperate days.
    The cat was out the bag so over the next few weeks I withdrew £2k every day until there was only an small odd amount left in the account.
    Clearly HBOS was an unstable bank at that time.

  • Comment number 55.

    There you go Eric that's what you get for helping Gordon Brown out.
    Of course Eric you are on your own as Teflon Brown will make sure you take all of the blame.

  • Comment number 56.

    I believe Homer Simpson put it best.


    Why oh why did Lloyds TSB buy HBOS? Surely it can only be because of that infamous meeting over drinks at Number 10 to their desire to keep their mate Gordon Brown out of the mire.

    The HBOS loss this year alone is likely to wipe out at least five years profits for the combined bank going forward, even on a very generous Gordon Brown type scenario.

    I can see lawyers salivating at this. I just hope that Lloyds has very very good D&O and PI cover.

  • Comment number 57.

  • Comment number 58.

    And Eric Daniels thinks he is modestly paid and wants to pay a bonus to his bank staff! I don't think so.

    What is sickening is the inactivity of the government which as a major share holder just needs to say - no bonuses period!

    But I forgot it's all one cosy cartel of politicians and bankers lining their own pockets with tax payers money, whilst in the real world people are loosing their jobs, homes, livelihoods.

    And when did we vote in Gordon? Roll on 2010

  • Comment number 59.

    Staggering! We pay over a £1bn to the Beeb in fees every year yet this post has been going for over 75 mins, there are 60 posts, and so far NONE of them have cleared the moderator.

    Did they forget to hire a moderator today?

  • Comment number 60.

    The chap that runs Lloyds must have known this figure when he was in front of the Treasury Select Committee and had the gall to say that he had a normal salary like everyone else (of about a million) - what a cheek!

    The Lloyds takeover of HBOS looks to have been a terrible deal for Lloyds' shreholders. This will not be the end of it I fear. How much more! Lloyds, a reasonably sound bank is being destroyed by the terrible HBOS. HBOS looks to have lost even more than RBS now. At least RBS had the AMRO deal as an excuse - HBOS has no such excuse.

    This raises the whole question of regulation and supervision yet again - these appalling men MUST go - they are not competent. (That is the Governor of the Bank of England, the whole MPC, the whole of the FSA and the Permanent Secretary of the Treasury.)

    Andy Hornby and Sir James Crosby deserve tarring and feathering and being paraded through the streets of the City of London displaying a notice saying "I broke HBOS, thank you taxpayers for bailing us out" It won't happen of course!

  • Comment number 61.

    What do we do with radioactive waste? We put it in a large concrete bunker underground - it's good for nothing.

    What do we do with a cancer? We try and remove it or reduce it. What if it is malignant, and spreads to all parts of the body...?

    Question - is all this toxic debt something we can bury / write off , or is it like a cancer that will overwhelm the whole financial system.

  • Comment number 62.

    Sometimes I wish that we could use 11 thousand million instead of 11 billion - just to reinforce the huge amounts that we are talking about.

  • Comment number 63.

    Daniels and Hornby must have know this and kept it under raps until after the meeting earlier this week.
    Can anyone ever trust these bankers again?

  • Comment number 64.

    I was under the impression the govt had played a key role in matchmaking these two?

    Are you now saying it didn't to protect Brown from the "share-wrecker" fallout of destroying an otherwise sound business by insisting it took on a basket case?

  • Comment number 65.

    It is very clear that however we come through this terrible financial crisis one thing is for sure. Those that run these companies actually have no idea whatsoever of what it really means to run a business in the real world. Statutory accounting and the FSA need to have a strategic review on how companies report their figures so that the reality is far clearer to see. Being a businessman myself the true reality of statutory accounts bear little or no resemblance to the coal face. However when one looks at the current issues it is clear that those "gurus" who are flying at the tops of the coporate world might do better looking a little deeper into the source of such accountig figures. A little less in the boardroom and a little more remembering that the consequences of their flawed descisions bear heavily on many many millions of lives.

  • Comment number 66.

    #2 "I wonder who will 'advise' the Government out of this mess? Milton Friedman I wonder??"

    Not unless it's by Ouija board.

    RIH Friedman

    (H stands for Hades)

  • Comment number 67.


    As a life long TSB customer, with all your contacts can you please find out who the idiot was who bounced TSB into buying HBOS.

    When the TSB boss appeared before the committee the other day he obviously forgot to mention this little gem of bad news. Surely he must have known about it when he spoke to the MPs.

    I think he may be hauled back to explain himself, don`t you?

    Can it get any worse? Gordon Brown was spouting off today in Coventry about it being everybody else`s fault and nothing to do with him. Trouble is he now believes it! Only problem for him the rest of us are no longer so gulible to believe a word a banker or the Govt says.

    No wonder the IMF and everyone else in the world who has a view on it says we are in more doo doo than any other country.

  • Comment number 68.

    Perhaps it might be seent hat the strategic efforts by the "government" to ease the financial crisis are nothing short of wet! An instant hit to the economy would be to remove stamp duty for one year in the housing market. There were many comments about how reliant this economy is on property - there were many doubters - perhaps the realisation that this economy is totally reliant on property might start to make sense. Our boom times were built on it and the economy cannot suddenly shift to a different focus overnight or indeed in a few years. Access to personal assetts such property, facilitated by a realistic lending policy, will provide a far greater stimulus than any other effort made. The government could easily become a national lender to the end user to facilitate this. Remove stap duty and turn the sconomy around. Its a natural tipping point for our economy out of the awful situation.!

  • Comment number 69.


  • Comment number 70.

    Isn't this just Lloyds giving HBOS a big bath, which is
    a) to be expected at a point where the previous management can be blamed for this years losses, and
    b) setting HBOS up to be more profitable in future having got so much of the bad stuff out of the way now?

  • Comment number 71.

    Yet another big story about, er banks...

    RP - If you have to craft these (always) well-written bank stories so that they are ready for you to read out on on the BBC 6 o'clock news when they hit the headlines (as they do on a daily basis) you could at least bother to write a different (business ?) story for this column.

    I mean, cummon...

    Unless you don't have time which means, I figure, you only do about 2 hrs work a day.


  • Comment number 72.

    Sir Victor is a pal of Gordon- think of all those cosy lunches and dinners they had together when he was Chairman of Trinity Mirror/The Daily Mirror - is that the real reason why Lloyds took over HBOS?

    Other Board members had their doubts.

    How does it feel Sir Victor and Mr Daniels to destroy tens of billions of people's pension fund investments in a solid bank for the sake of your egos?

    You will rival Sir Fred in the worst banker stakes.

  • Comment number 73.

    we continue to be suprised by banks losses, why ? international business paid more and more for raw materials, for new plant and for new transport mechanisims. the debt for new oil tankers and bulk carriers must be half a billion on its own and the bottom has fallen out of that market along with so many others. i think we're not even close to the end of nasty suprises yet and what will gordo do then poor lamb. no doubt a new commisioner of debt will be appointed and the pound revalued alongside the zloty.

  • Comment number 74.

    Here we go again!

    First the ungodly loss of £10 or £11 billion. Next it will be time for the bonuses.

  • Comment number 75.

    copy of transcript of interview between jeff randall and Sir victor Blank (lloyds bank chairman)..........less than one month ago, 19th january 2009


    Why don’t the banks come clean, why are they not telling us what’s really going on?


    Well this bank has come clean. We showed twelve months ago exactly what we had got in terms of any kinds of toxic assets …


    Including HBOS?


    We didn’t own HBOS then.


    But is everything out there now?


    I believe that everything is out there as far as HBOS is concerned, they’ve made I think three or four statements over the course of the last year explaining exactly what their financial position is.

    Did lloyds do "due diligence"? did they even have the faintest idea of what they bought?......... As a lloyds shareholder i want some answers....Lets hear the real story about what happened between government and lloyds...Someone should end up in court for this failing in fiduciary duty..

  • Comment number 76.

    My impression was that Flash and co. put a lot of pressure on Lloyds to go through with the takeover. At this point, Lloyds and their shareholders deserve some guarantees from the government.
    Perhaps the government would like to buy HBOS from Lloyds? I understand a very experienced person called Crosby is avaliable to take charge.......

  • Comment number 77.

    At long last Mr Peston, a straightforward piece of journalism without the usual over theatrical new labour biased spin!

    Mr Daniels should now have the decency to fall on his sword and resign, along with his chief supporters on the LBG board.

    He has all but completely destroyed shareholder value for previous Lloyds TSB shareholders. I cannot imagine that target was in his contract.

  • Comment number 78.


    "Those investore" are we, the taxpayer, who underwrote I think the shares at 173.3p ( LTSB element) and 187.77p/113.6p maybe (HBOS element) ? Can anyone confirm this. Shares trading now at 64.8p ! We've just stood the losses -pure and simple.

    Who is answering for this on our behalf - forget about Daniels, I've got doubts about those representing the taxpayers?

    What about the 4 billion preference debt- is this going to be redeemed?

    Does anyone care or is this just confetti in the wind.

  • Comment number 79.

    #4 nametheguilty

    We can't just blame the bankers stupidity for the Lloyd`s HBOS merger.

    Remember Crash Gordon and Ally Darling couldn't get that merger through quick enough at the time!

  • Comment number 80.

    but hang on two ticks

    in 2005 HBOS made £4.81bn profit. In 2006 £5.7bn & in 2007 £5.7bn.

    So i make that £16.21bn profit over the past 3 years, less the £11bn loss this year, which leaves them £5bn up for the past 4 years.

    So, surely no panic? Surely they have some of the £16.21bn in a piggy bank somewhere just in case things went wrong?

    O - that isn't how the banks works you say. Make that "don't work" and i will agree.

    Is the time right to nationalise the whole lot? Many economists now agree it is and i can see why.

  • Comment number 81.

    I look forward to the 'whistleblown' truth emerging about the Brown governments role in the take over of Lloyds and HBOS.

    It will happen, some very proud and successful men are 'eating the ass of the elephant' for Brown right now.

  • Comment number 82.

    Hi Robert

    If the authorities can't sort out this mess, I suggest we all withdraw our funds from these toxic banks - the run on Nothern Rock will appear like a picnic.

    We can then put the money with those few responsible intitutions left which will put them in a position to lend again.

    Let's see if any of these bank executives will then still be in a job - nevermind receiving a bonus.

  • Comment number 83.

    Why on earth did Lloyds buy a bombed out ole bank not even worth a bawbee?

  • Comment number 84.

    #30 I'll think you'll find Bush had served 2 terms and was hence ineligible to stand in the last election.

  • Comment number 85.

    Can any one help me? perhaps PUZZELING has some ideas .

    Many of the bloggers seem to be able to explain things in succinct terms unlike the bbc news prorammes.

    I have 2 children both in primary school.
    They asked me what have the banks got to do with the credit crunch.

    My best explanation.............................

    A family decide to trust one family member, say an Uncle, with all of the holiday money.
    The family have saved for many months to build up the kitty. pocket money, overtime all spare cash is in there.

    during the holiday Uncle decides he needs a bonus for the responsibility for holding the kitty...... he doesnt tell us how much he needs and we foolishly believe he will be taking out enough for a couple of extra 99s!

    Time comes for a trip to the fair. We ask for some cash....... Turns out that the kitty has been put on the Great Yarmouth races! After we fume we ask him to replace the kitty with his own money....Sadly it turns out that his cash went on the bingo. .... Then borrow some we say.... Lots of other Uncles have got money to lend, Nope he says....They were with me at the races.

    As we contemplate our lack of cash we decide that the only option is to ask the government to help us out. Not at all they say.... The kittty holders got here before you and they need everything going.

    But say my childen.You must be wrong. No adult would be be so selfish, no family could be so foolish and surely our Government would put the evil Uncle in to prison.

    As I said, some help please...... John Craven would find it hard to explain.

  • Comment number 86.

    Sell them a rope!

  • Comment number 87.

    I wonder if they haven't written off more than they can chew - taken the real write-offs added a generous lump of contingency for good measure, and now sit back to await the golden profits of the future, put in a thumb, pulled out a plum and say what good boys are we.

    But I'm only a cynic. Pay no attention.

  • Comment number 88.

    One little thought crossed my mind on the takeover and I extracted these two quotes from the BBC site.

    Scotland's First Minister Alex Salmond has urged HBOS to reconsider a proposal by two of Scotland's most prominent financial figures that the bank should take them onto its board; reject the takeover by Lloyds TSB and remain independent. He discusses the proposal.

    Two of Scotland's most respected bankers have urged HBOS shareholders to reject the Lloyds TSB takeover of the company.
    Sir Peter Burt, the former chief of the Bank of Scotland, and Sir George Matthewson, the former head of the Royal Bank of Scotland said they could help HBOS remain independent.

    Given events of the last few months I do wonder what messrs Salmond,Burt and Matthewson think now. I smile gently - politicians !!

    On to more up to date matters , I urged everyone to watch the full recording of the parliamentary committee on Wednesday - if you did would not be surprised at today's announcement , it was all there for all to see, with the exception of the figures.

    Eric Daniels admitted that HBOS was more problematical than originally envisaged, down to the deterioration in the world economy, but despite this was still working within the best/ worst range anticipated at the time of the takeover.

    Yet despite this there was still a positive future to come out of the integration of both businesses and capital and funding was more than adequate.

    If you want to watch and make an informed judgement it is here.

  • Comment number 89.

    And some people still believe in the Barclays "profits" tosh of last week...

  • Comment number 90.

    How feeble is this government??

    Not only do they let you and I the taxpayers rescue most of the banks from the abyss and put the country and the 'common' people in hock, they also convince the one and only well positioned bank, namely Lloyds, to take HBOS off their hands knowing what a hellish mess it was going to create in the near future for Lloyds.

    It's absurd for G Brown to try and wriggle off the hook over the banking fiasco as it's on his watch that all this happened. What with a non-existent FSA, greedy bank bosses and greasy polititians all to ready to roll-over to help the economy supposedly boom, (and not bust, eh Gordon!), it's easy to see why it went so wrong.

    By the way, don't bother to say sorry Gordon as it won't be sincere.

  • Comment number 91.

    Might not this be a case of Lloyds' CEO and Chairman getting as much bad news out all at once so that they look good this time next year. Even a low profit for 2009 will look fabulous.
    As a Lloyds shareholder I sincerely hope that this short-term pain is worth the long term gain!

  • Comment number 92.

    Am I alone in thinking that we are getting into the endgame now?

    A total meltdown of each and every bank?

    Is it time yet to nationalise all British banks in the interests of national security?

    Should each bank be closed down and put into run-off, with all new business being conducted through just the retail arms of say Lloyds and RBS...duly renamed as Bank of ANYTHINGBUT Scotland?

    Any other corporation getting themselves into trouble with loan renewals must be left to go bust.

    The meddlesome Brown has to be stopped from trying to save the British economy....the whole thing is now listing heavily to port and cannot be saved from sinking.

    We need government to make sure there are enough lifeboats on hand to pick up the victims of this man made disaster and to ensure also that they are properly housed and fed....That in itself is going to be a big enough job.

    Forget saving the economy. It has been destroyed beyond recognition by hubris and greed.
    Let the greedy and the arrogant along with all their hapless victims go down.

    Only in this savage way can the good half of the economy survive....

    Brown is showing signs of delusion. He must be removed now at any cost.


  • Comment number 93.

    The Labour governments primary objective throughout this crisis remains to maximise its chances of winning the next election.

    This will be to the detriment of future growth as the consequences of printing money and the exploding debt burden risks a currency crash that at best means many years of stagflation and at worst hyperinflationary bankruptcy along the lines of the Weimar Republic and the most recent example of Iceland.

  • Comment number 94.

    Of all the banks I have ever used, HBOS was the one that obviously was most sales-focused. Ok, so the cashiers were obviously well versed in trying to make it appear that there was no hard sell going on, but when a simple trip to lodge a cheque turned into a covert hounding I realised I'd been there too long.

    I realise all banks are sales focused but HBOS were a joke. How I longed for the cashiers to wake up to the fact that they'd been turned into automatons who couldn't converse with a customer without offering to "save" them money. This seemed to be the preferred tactic.

    The collapse of the banking system is no surprise. It's not rocket science. It's an inevitable result of greed. And never was that more apparent that the grabbing tactics of the bank who marketed themselves as "always giving you extra". Bill Hicks had a point!

  • Comment number 95.


    Now now ..your slip is showing. I'll wager that, at the time of the coming together of BOS and Halifax you trumpeted it as being a Halifax take over of BOS.... ...Halifax well run after demutulisation...get a grip man!!!

  • Comment number 96.

    Losses themselves are bad news for stake holders, but what about the Treasury?

    RBS and now HBOS have announced massive losses, which (in basic terms) can presumably be relieved across the Group and also carried back. That results in, I presume, a large shortfall in Tax Revenues receivable by the Treasury and also a large tax refund departing said Treasury.

    (The above is written in an assumption of basic simplicity to corporate tax affairs. As one national newspaper is currently campaigning about how FTSE companies avoid paying tax then I could be wrong).

    But regardless, any shortfall and any refund adds to the Public debt.

  • Comment number 97.

    So now we know how much they really lost. Next week, I believe the public will finally find out who was really involved in losing the money, where a lot of it went and how hard HBOS have tried to cover up the truth.
    If someone was to write a book, or a film script about what really went on at HBOS, every publisher in the UK would refuse to publish on the grounds it was totally unbelievable and farcical. But the next few weeks will produce a better story than James Bond + Get Carter - or will that be James Crosby + Get Brown?

  • Comment number 98.

    it seems no one wants to remember that Lloyds would have had to look for state funding had this merger not gone through reference the letter from Sir Victor Blank on the Lloyds website..!!..

    stop looking for scapegoats..lets get the probelms fixed !!!

  • Comment number 99.

    Isn't it a good thing to write down this debt?

    Lloyds may be 43% owned by the Government but they still have a great future, at least they are being transparent!

    Was the share price fall down to short sellers again trying to make a quick buck at the expense of eveyone else - I think it was.

  • Comment number 100.

    are you really shocked Bert - to my mind only a numpty (your word not mine) would be shocked given what has been going on

    think you are in the wrong game chief


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