HBOS

123jump.com Staff
12 Dec, 2008
New York City

Stocks in London dropped 2.6% after mortgage lender HBOS reported larger than expected loss in the interim period. Majority shareholders approved merger of the troubled lender with Lloyds TBS Group. UK is likely to provide second stimulus package as reluctant banks are not increasing lending.

[R]1:00PM New York, 6:00PM London - HBOS reports interim losses £2.2 billion and shareholders approve acquisition of Lloyds TSB Group.[/R]

London stocks fell after HBOS reported today in its interim management statement that estimated losses due to market deterioration were £2.2 billion. Financial stocks fell.

In London trading FTSE 100 index dropped 2.6% or 113.94 to 4,274.75.

Of the FTSE 100 index stocks, 22 rose, 79 declined, and one was unchanged. Wood Group led gainers in the index shares with a rise of 2.4%.

HBOS Approves Acquisitions of Lloyds TSB Group

HBOS reported that the acquisition of Lloyds TSB Group received 56% shareholders vote of the company''s issued share capital by value.

Separately the company reported in its interim management statement that the credit quality has deteriorated and asset values have declined. Pressure is mounting on net interest margins due to the significant reductions in UK base rates, while wholesale funding costs remain high.

Deterioration in the trend in secured lending arrears combined with sharp declines in house prices resulted in an estimated secured lending impairment charge of £700 million in the first 11 months of the year, while the estimated impairment charge for unsecured lending arrears is £1billion in the period.

HBOS investment portfolio losses are estimated at £800 million for the 11 months to November 30, 2008.

“However, through the injection of capital and liquidity facilitated by the UK Government, both currently and going forward, HBOS remains confident in its ability to navigate through this difficult period, as it becomes part of the enlarged Lloyds Banking Group,” said the mortgage lender.

U.K. working on Second Stage of Bailout

Bloomberg News reported today that Prime Minister Gordon Brown said in Brussels the country is working on the second stage bank rescue to save consumers and businesses.
Banks remain reluctant to lend even after a series of rate cuts and a £50 billion government plan.

Gainers & Losers

Wood Group led advancers in the FTSE 100 index shares with a rise of 2.4% followed by increases in Experian Group of 2.4%, in Bunzl of 2.3%, in Smiths Group of 2%, and Amec Plc of 2%.

HBOS Plc led decliners in the FTSE 100 index shares with a drop of 19.1% followed by losses in Lloyds TSB Group of 17.8%, in Man Group of 15.5%, in Royal Bank of Scotland of 15.1%, and Barclays of 8.1%.

HBOS fell after reporting that losses due to market dislocations soared to £2.2 billion by November.

Europe Markets Review

In London FTSE 100 Index closed lower 108.34 or 2.47% to 4,280.35, in Paris CAC 40 Index decreased 92.53 or 2.80% to close at 3,213.60 and in Frankfurt DAX index lower 103.83 or 2.18% to close at 4,663.37. In Zurich trading SMI decreased 93.68 or 1.63% to close at 5,636.17.