Lloyds CEO says does not plan disposals soon - 18 Dec 2009 -

LONDON, Dec 18 (Reuters) - The disposals Lloyds has agreed to as compensation for taking state aid were a "very fair deal" but it has no plans to sell the assets off soon, the banking group's chief executive told the Financial Times .

To satisfy Europe's competition watchdog Lloyds, which was backed by the British government when it rescued battered rival HBOS at the height of the credit crunch, has said it will sell 600 of its retail branches, with disposals including Cheltenham & Gloucester branches, Intelligent Finance and the TSB brand.

It has up to five years to make the sales and does not yet plan to follow the lead of fellow part-nationalised Royal Bank of Scotland , which has already begun the process of disposing of the assets it was required to.

"There's not a lot of M&A activity going on so I'm not sure the timing would be best," Chief Executive Eric Daniels said in an interview published in Friday's paper.

Earlier this week Lloyds, Britain's largest retail bank, completed a record 13.5 billion pound ($22.08 billion) rights issue which was aimed at helping it avoid a state-backed scheme for bad debts. [ID:nLDE5BD089]

Joining that Asset Protection Scheme (APS) would have left the bank facing more stringent rules over how it managed its loan portfolios, Daniels acknowledged.

"For example if a company has borrowed too much, they can't afford to service the debt," he said.

"You don't want to necessarily foreclose on the company because you think it may have a chance of recovery but you convert some of the debt into an equity position. Now that would be a very complicated thing to do under APS."

The bank's loan impairments have peaked, he told the paper, adding that the "terrible concerns" about impairments, liquidity and capital were over.

Although the performance of HBOS this year had been "much, much worse than anybody expected," he said, he defended the takeover deal, adding "After you get through the lumps, this is going to be one hell of a deal."

"I think the HBOS transaction really does get us on a very different and much better strategic track."

All the banks shares have been moving south for the last couple days ........

Yesterday The Basel proposals for the banking sector were released and they are not going down well.

Changes to the definition of Tier 1 equity and Tier 2 level, it seems relatively hardline approach to new capital and liquidity definitions, in one way it is viewed negatively for the sector as a whole.

great news..havent got to sign on for 4 weeks

lol

DREAMS WILL KEEP THIS BANK ALIVE BUT GET YOUR CASH OUT. .GOOD BANK BAD BANK GO GREEN.

merry christmas.......hic!

* Deutsche Bank has buys for Barclays, Lloyds and RBS and holds on HSBC and Standard Chartered.

The broker expects little improvement in market risk appetite towards these stocks in the very near term given the lack of meaningful newsflow form the banks themselves until the results season begins in February. Deutsche believes the key risk to the performance of the UK banks is the potential for an increase in wholesale funding costs for the group, perhaps linked to changed perceptions around the outlook for inflation, sovereign risk or the solvency of the institutions themselves.

(SHARECAST) - The warning by the Basel Committee last week that banks will have to face lower returns in future has not dissuaded Deutsche Bank from extolling the virtues of investing in the shares of UK banks Barclays, Lloyds Banking and Royal Bank of Scotland.

The German bank has reiterated its buy recommendations for all three, believing that an improvement in the loan write-down situation is on the way in the second half of next year.

Deutsche concedes, however, that the market may continue to treat the shares with suspicion until the next results season in February. The banks also remain vulnerable to a slump in confidence which could bump up funding costs.

        COFFEE TIME FUN

Buying a good looking Christmas tree is one thing,
but bringing the tree back home is just as important.

So please dont bring it back home this way,
it might not look as good as when you bought it!

Summary of YESTERDAY'S UK stock movements:

'Banks led the way, with Barclays (BCS) up 2% and HSBC Holdings (HBC) up 0.8%. In addition to the low interest rate environment, a published report suggested that the Bank for International Settlements will phase in stricter capital requirements over a ten to twenty year horizon.'

This is the political way forward- stricter capital requirements over 10 to 20 year horizon. This will happen. Not this year or next but at least 10 years into the future

So an end to all this shortterm panic over capital requirements. Lets see the Banks rebound

Q3 GDP revised up less than expected

LONDON (Reuters) - Economic output fell 0.2 percent in the third quarter of this year, a smaller-than-expected upward revision from an earlier estimate of a 0.3 percent decline, official data showed on Tuesday.

The Office for National Statistics said the revision came as a sharp upgrade to construction output was offset by weaker services and industrial production output.

Separately, the ONS released data on the balance of payments. The current account recorded a deficit of 4.703 billion pounds from a deficit of 4.375 billion pounds in Q2.

Lloyds Agrees to Pay $3.6 Billion to Raise $2 Billion (

Dec. 22 (Bloomberg) -- Lloyds Banking Group Plc, the 43 percent U.K. government-owned bank, agreed to pay at least $3.6 billion over 15 years to raise $2 billion in Tier 1 capital.

The mortgage provider sold hybrid securities on Dec. 15 that cost 12 percent, or $240 million a year in interest, until 2024, according to data compiled by Bloomberg. Thats a higher interest rate than bicycle-rack maker TriMas Corp. paid to sell senior notes, which Moodys Investors Service rates Caa1, seven steps below investment grade.

Lloyds is paying up for the new capital after it raised about 23 billion pounds ($37 billion) in debt and equity since the beginning of November to bolster its balance sheet and avoid handing majority control to the government. The lender posted a first-half loss of 3.1 billion pounds because of writedowns on corporate and real estate loans.

Its expensive, especially for a bank thats struggling in terms of earnings, said Simon Adamson, a senior credit analyst at CreditSights Inc. in London,. Lloyds is supposedly in a better position than it was a few months ago, but this may well be the price they have to pay to borrow.

Credit Agricole SA, Frances third-largest bank by market value, is paying 8.375 percent on $1 billion of perpetual subordinated hybrid notes it sold on Oct. 5, Bloomberg data show. The notes, to which Moodys gave its fourth-highest rating of Aa3, switch to a floating rate of 698 basis points more than the London interbank offered rate if not redeemed in 2019.

Loss Protection

Tier 1 capital is used to cushion senior lenders and depositors against losses. Lloyds set aside 13.4 billion pounds for bad debts on Aug. 5, more than the 11.3 billion-pound estimate of eight analysts surveyed by Bloomberg. Provisions will drop significantly in the second half, the lender said.

Lloyds perpetual hybrid securities, which Moodys rates Ba1, or one step below investment grade, can be redeemed in 2024. If that call date isnt met, the securities will float at 11.76 percentage points more than the three-month Libor, which is currently 0.25 percent.

A large U.S. bond manager purchased the securities in a private placement, according to Joe Dickerson, an analyst at broker Execution Ltd. in London. The deal was the result of a so-called reverse inquiry, in which the buyer approaches the seller, Lloyds spokeswoman Sara Evans in London said in a statement.

We are delighted with the outcome and the capital flexibility that this sort of transaction gives us, Evans said. We were in a position to react quickly and execute a transaction with 24 hours.

Basel Committee

The Basel Committee on Banking Supervision last week published recommendations on bank capital that would rule out banks using hybrid securities as capital and asked them to stop issuance. Lloyds agreed to the sale a day earlier.

Its hardly clever to follow a 13.5 billion-pound rights issue with a $2 billion Tier 1 capital offering carrying a 12 percent coupon, Dickerson wrote in a report. The ramifications for both the capital position of the bank and the cost of capital are negative.

The coupon rate on the Lloyds notes is the market price that must be paid for deeply subordinated paper, he wrote.

TriMas, the Bloomfield Hills, Michigan-based maker of trailer hitches and bicycle racks, raised $250 million on Dec. 17 selling eight-year 9.75 percent notes that yielded 10.13 percent, Bloomberg data show. The company posted about $419 million of losses over the past three years.

Moodys defines securities rated in the Caa category as being of poor standing and subject to very high credit risk.

Wants to break through 50p but still at 49.90p and needs to do it soon as the markets are UP and has to take advantage of that

Banks wave goodbye to woeful 2009 -- Rhian Nicholson -- 24.12.09

Bad debts, the bonus backlash and the iron fist of government intervention took a savage bite out of the banking sector last year as the credit crisis - and then its aftershocks - brought the threat of financial Armageddon a little too close for comfort.

All of the government's purchase of shares - together with offers of guarantees, insurance and loans made to banks - came with a hefty price tag of around 850 billion, according to the National Audit Office in December.

However, the auditor said that the Treasury had made the right decision to nationalise Northern Rock and take huge stakes in Lloyds Banking Group (LLOY) and Royal Bank of Scotland (RBS) - a view which did little to relieve shareholder anger over their heavy losses in recent times.

So here's a quick reminder of the few highs and many lows of the banking sector for 2009.

The New Year brought little relief from the carnage that was the last quarter of 2008. In January, HSBC (HSBA) shares plunged to seven-year lows after analysts warned that a cash call could be on the cards. Shares in Barclays (BARC) plunged to a 24-year low soon after amid concerns over its profit expectations while Royal Bank of Scotland lost 70% of its market value after it warned it is likely to post the biggest loss in UK corporate history.

The big-name banks then risked the ire of investors amid news they could be paying hundreds of millions of pounds in bonuses despite their precarious financial positions. This led the government to launch an enquiry into the bonus fiasco and impose restrictions on RBS and Lloyds bonuses.

However, there was worse to come. Lloyds Banking Group saw its shares go into freefall after it warned of 10 billion of pre-tax losses at HBOS in February. RBS then stunned the markets when it announced record annual losses of 24 billion.

By the end of February, the government was attempting to clear up the worst of the mess with its asset protection scheme - an insurance programme for the banks' riskiest assets. However, HSBC it launched a record 12.5 billion cash call as it revealed a 62% plunge in pre-tax profit for 2008.

Just as a semblance of calm was settling over the sector, the political fireball that was Sir Fred Goodwin's pensions came blazing onto the scene. His initial defiance was gradually eroded by the public outcry that followed, leaving him with (just) 342,500 a year.

First quarter figures from Lloyds and RBS sent another shiver through the markets as investors tried to second guess just how many more bad debts are likely to come out of the closet. Barclays and HSBC, in contrast, were proving sprightly following a strong performance from their investment banking divisions.

It wasn't long before the need for cash resurfaced with Lloyds reaching out to shareholders for 4 billion in June - and 87% of them snapping up new shares. Barclays also ran into a summer storm after its Abu Dhabi investors announced they are selling off part of their stake they acquired in October 2008. In June, the bank then shored up its own balance sheet with the 8.2 billion sale of Barclays Global Investors to BlackRock.

The bad times were, however, far from over. In August, first-half results showed the sector was far from on the mend with bad debts taking a hefty bite out of profits and arguably the most stable bank of the bunch, Standard Chartered (STAN), stunned the markets with a 1 billion fundraising.

Then the divestments started. Lloyds flogged part of its part of its private client fund management business to Rathbone Brothers in a deal worth up to 35.4 million. In return for its state aid the part-nationalised bank was forced to sell off a fifth of its UK branch network including the TSB branches in England, Wales and Scotland and mortgage broker Cheltenham & Gloucester. Its Intelligent Finance online business will also be going to a new home.

Additionally, it announced the UK's biggest ever rights issue at 13.5 billion - which received a 95% take-up - and a 9 billion debt swap as it sought to avoid participating in the government's asset protection scheme.

RBS was also bowed to the might of the EU Commission in return for its 53.5 billion of state aid. It is selling off 318 branches in the UK - equating to 14% of its branch network in return for state aid and its participation in the government's asset protection scheme.

This will include its RBS branch network in England and Wales - originally Williams & Glyn's -and its NatWest brand in Scotland.

The bank, which is 84% owned by the taxpayer, will also offload its card payment business RBS Insurance and Global Merchant Services and its stake in commodities trader RBS Sempra Commodities.

The Commission also cleared RBS' participation in the APS, in which it will insure 282 billion of toxic assets. Around 168 billion of these loans originated overseas with around 75 billion in continental Europe relating largely to RBS' disastrous acquisition of ABN Amro.

And the story is far from sorted. The government has said that taxpayers are sitting on potential losses of up to 50 billion - depending on future losses from the 282 billion of toxic assets that RBS is planning to insure and the amount it can get for selling its stakes in Lloyds.

Sadly there was no happy ending for shareholders in the Northern Rock saga. In January, around 150,000 Northern Rock private investors along with hedge funds SRM Global and RAB Capital started their fight for compensation in the High Court - a battle which they subsequently lost and ended up heavily out of pocket.

In December, Rock shareholders were told the bitter news that they are not entitled to receive compensation following the nationalisation of the troubled lender two years ago.

Independent valuer Andrew Caldwell, who was appointed by the government 14 months ago, concluded that there was "no value in the share or rights as at the valuation date and therefore no compensation is payable".

It was, by all accounts, a trying year for investors. While the going started to get a little easier towards the end of the year and the worst is hopefully over, the financial sector is far from out of the woods. Next year will be an interesting - and hopefully more prosperous - one.

Has move over 50p to 50.05p+0.78p

will see for how long it will last, anyhow the best of the bank bunch

Itau may buy stakes in RBS, Lloyds
Mon Jan 4, 2010 5:14am GMT

SAO PAULO (Reuters) - Brazilian lender Itau Unibanco (ITUB4.SA)(ITUB.N) is considering buying stakes in one of the British banks rescued by the U.K. government during the global credit crisis of 2008, the Sunday Times said on Sunday.

Sao Paulo-based Itau Unibanco, the largest non-government lender in Brazil, may bid for stakes in Royal Bank of Scotland (RBS.L) and Lloyds Banking Group (LLOY.L) as the British government sells off its stakes, the paper said, citing Pedro Malan, Itau Unibanco's chairman of its international advisory board.

A spokesman for the bank said in a phone interview from Sao Paulo that the information in the report, on the whole, was not true. The spokesman declined to give any information about how or when Malan was approached.

Itau Unibanco, the byproduct of Brazil's largest financial industry combination, is also examining deals in a number of other countries, including the United States, Malan, a former Brazilian finance minister, told the newspaper.

"We're looking. Of course we're looking," he told the newspaper. "But we're not in a hurry. We think we have time."

Any investment plans in the U.K.'s financial industry will be "refined" throughout 2010, Malan told the Sunday Times, adding that, aside from the uncertainty in the global economy, this will be an election year in Brazil.

The British government said in early November that it was to pump over about $50 billion into RBS and Lloyds.

At the time, the government was sitting on a paper loss of over 10 billion pounds ($16.2 billion) on its 37 billion pound rescue deal in October 2008.

Currently, and including the November capitalisation, British taxpayers hold an 84 percent stake in RBS and own about 43 percent of Lloyds.

You forgot to mention he price per share paid by the taxpayers.
We have over 20% to run on these two.

just touched 54.70p - going north !

Banks are on a good mood today and that has inspirer the FTSE higher at the moment after opening lower

Is there a safer, better, secure, promising share on the market than LLOYDS Group?
I dont think so - its no no brainer with no downside as far as I can see.