Todays' Telegraph suggests that changes in accounting rules could allow the likes of Llloyds to write back billions of pounds,and hence report a profit for the first 6 months.

July 21 (Bloomberg) -- Lloyds Banking Group Plc, Britains biggest mortgage lender, will post writedowns of 50 billion pounds ($82.2 billion) by the end of 2010 as rising unemployment causes bad debts to soar, said Sandy Chen, Panmure Gordon & Co. banking analyst.

Lloydss impairments will rise to 23.5 billion pounds this year from 15 billion pounds in 2008, Chen said at a meeting with reporters in London today. Bad debts will reach a similar level next year before declining in 2011, he added.

We wont be post-crisis until 2012, said Chen, who has a sell rating on Lloyds. Theres no sector in the economy providing an outlet for the newly unemployed.

Lloyds, 43 percent owned by the government, has cut almost 9,000 jobs this year and is considering asset sales after a 7.7 billion-pound takeover of HBOS Plc, previously the countrys biggest mortgage lender, caused the quality of the banks loan book to deteriorate.

Lloydss first-half profit will be very strong because of accounting gains from the HBOS takeover and a 6 billion-pound gain as a result of a debt-swap, Chen said. ..........

http://www.bloomberg.com/apps/news?pid=20601102&sid=axzbWTNPhfB0

No wonder is moving lower

On today's news .... from the GUARDIAN

Banks which have been bailed out by European governments will be forced to shrink their businesses and sell off certain assets under new guidance to be issued by the EU on Thursday.

Amid warnings by EU Competition Commissioner, Neelie Kroes, that Royal Bank of Scotland and Lloyds Banking Group may need to be broken up, analysts are forecasting that they may also need shrink their branch networks to comply with European rules on fair competition.

Analysts are also looking forward to the interim reporting season next month when rising unemployment is expected to cause a further increase in arrears and bad debt charges.

Sandy Chen, banks analyst at Panmure Gordon, is estimating that Lloyds Banking Group could write off almost 50bn in the next two years because of loans which have turned sour, largely as a result of the takeover of HBOS.

Chen, who is regarded as the most pessimistic of the banking analysts, is forecasting that Lloyds will make provisions of 24bn this year and 23.5bn in 2010. He also expects Lloyds and RBS to sell off core and non-core assets to appease EU rules. He suggested Lloyds might close 20% of its 3,000 or so branches, following the decision to axe all 164 Cheltenham & Gloucester branches.

The bank's stake in St James' Place and insurers Clerical Medical as well as fund manager, Insight, might also be on the block. RBS has started to scale back in Asia and there are expectations that it might need to pull back from operations in continental Europe.

The EU is not expected to give specific guidance on each of the 70 banks in Europe which have received taxpayer handouts, but will set out broad guidelines about how they should be treated.

The EU is expected to acknowledge the extent of the financial crisis by giving banks up to five years to complete any restructuring that allows them to survive without state support, rather than the usual two to three years.

Lloyds has already warned the City that the EU might demand disposals in return for the injection of government funds and its participation in the asset protection scheme, which is insuring 585bn of troublesome loans at both Lloyds and RBS. Lloyds figures in the first half will be flattered by accounting gains from the HBOS takeover and gains from a reshuffling of its debt. But accounting quirks could force HSBC to record a loss in the first half because of a $4.7bn (2.8bn) hit from its record-breaking 13.5bn rights issue.

Panmure Gordon, which is an advisor to the government on Northern Rock, thinks UK Financial Investments, which looks after the taxpayer's stakes in the bailed out banks, might have a short window to sell some of their stakes next month before being locked in for many years. UKFI has refused to be specific about when it might sell its stakes in the banks but admitted it could take place in tranches over several years.

Chen's analysis includes a gloomy outlook for the UK economy and particularly unemployment where he notes all sectors are suffering layoffs making it difficult for redundant workers to find other jobs. He also notes that people on the lowest household incomes are suffering most during the recession while those on higher incomes are benefiting more from the low interest rate environment. Chen thinks GDP growth will be muted until household income starts to rise again.

.............a few months ago Chen predicted Barclays would fall to 40p.........and then it shot up steadilly to 3. Enough said about this idiot. Of course Branches will be closed at LBG - most Lloyds TSB UK Branches have a Halifax in the same High Street! Nothing new here then. As for UKFI, there is no way they will sell stakes in RBS/LBG at a LOSS - can't see 'em selling next month but would just love to see Gordon & Alistair explain that one away to the electorate. LOL. Oh, and by the way, demerges can, and frequently do, offer shareholders enhanced value ie. the value of the individual parts are often worth more than the total sum. Sit tight for now IMHO.

chen is a serial shorter of banks he is trying to frighten the market ahead of the banks reporting season.

A much better day today as is trying to reach new highs ( intraday )

I followed Sandy Chen in 2007/8 and his predictions were spot on, I couldn't fault him. He seems to be now struggling to arrive at a consistant opinion with Lloyds, I remember he put out a postive statement at the time of the Hbos takeover, and now he has reverted to a bearish stance.

I think the problem chen and others like Peter Schiff have, is because they called it right and were ultra bearish, they find it hard to shift opinion now.

these so called anal....ysts have to support the position their bosses advocate,if they are seriously short then they have to support their argument with numbers they "pluck out of the sky" can anybody correctly predict the unemployment total in say 2011. Sometimes they get lucky but most of the time their predictions fall flat on their face, but nobody remembers them because they were wrong.

We have reached 75p

last chance to buy before it rockets! lets hope chen and his band of shorters are wiped out.

All I can say,is God save us from the anal....ysts.

Taking up the rights issue at 38.5p is now looking to be a good call for all those that did.

lol..........u must be joking as the poor sods that did have lost all their wealth by having the initial shares.

halifax thinks this will rocket......lol.....no chance.

if this is 6 quid in even a years time, i'll streak down the street........thats how condident i am that lloy like all banks are knackered

I hope you are going to give us all advanced warning which street corner to stand on!

Would you really want to see all that hanging out??????:((

marni

Are you out? .... YES>>>>>>>>>>>>> someone would say: get lost to the shares thread ...RBS that you said would buy on selling LLOY.

Why?
You are acting like those that once sold become negative, so not worth posting.
The shares are reaching new highs since the 61p end of RI.

Talking nonsence ... YES

re - lol..........u must be joking as the poor sods that did have lost all their wealth by having the initial shares.

I and many more bought the shares when prices where 40's to 50's

Has reached 79p today

and "marni" sold long time ago at lower prices ( wanted 10% ) but could not get it
must be a bit of "SOUR GRAPES" now by the way is talking.

i know you been putting loads of effort on this share.......and probably huge speculation......where do you see this recovering to.........

i dont have these master.

i only said the people that bought at 38p were the poor sods that had tonnes of shares in 1st place for them to be in rights issue for shares.

oh and try not to be so insulting cos someone thinks lloy is crap......and it is!!

Sp for the rights Issue was approx 95p, being the date on which you had to hold the shares to qualify (20th may). The rights were bought at 38.5p, which have now doubled in value & the sp is only 17p (approx 18%) from the 95p original price.
Even if holders bought their shares a little above that price, profitability is not far off. Also there was a free issue on the 9th may (1 share for 40 held) so they are a free ride.