did you hear that big bang !!! Its was Lloyds going POP

FROM THE telegraph

Saturday 7 August 2010

Lloyds' quiet American tells Damian Reece why a purchase that cost the bank billions will turn out to be a 'very, very good deal'

Eric Daniels, the American chief executive of Lloyds Banking Group (LSE: LLOY.L - news) , has led the company back to profit 1.6bn in the first six months of the year. Some analysts reckon he could be reporting up to 4bn for the year as a whole and are forecasting the bank will have accumulated a massive cash pile of 10bn by 2012.

It's a startling performance for a bank which, after its controversial acquisition of HBOS completed in January 2009, seemed to be heading for the knacker's yard, with the share price plunging to just 19p in March and investor anger rising in a crescendo of indignation. Lloyds lost 6.3bn for the whole of 2009.

"Why am I not apologising about HBOS? Because I believe this will turn out to be a very, very good deal," says Daniels, sitting in his City office in Gresham Street overlooking St Paul's Cathedral.

He's surrounded by the past: two oil paintings in ornate frames of the bank's bewigged founders, Samson Lloyd and John Taylor, dominate one wall. But he's keen to talk about his and the bank's future, something encapsulated by a lucky potted plant he moves around his office. Given to him by a friend and former colleague years ago, its continued leafy greenness is a superstitious link to success. As long as it's growing, his winning streak will continue. "It's like the ravens in the Tower of London," he explains.

Wednesday's interim results seemed to confirm what Daniels has always stubbornly contended, despite the criticism, that he's created a force for good for customers and shareholders alike. The combination of Lloyds and HBOS, itself a merger of Halifax and Bank of Scotland, has established a business that will dominate the British banking scene with 3,000 branches on the high street and online services that Daniels intends to invest more in. It was brokered at the height of the financial crisis in 2008, when HBOS looked like following Northern Rock into nationalisation.

"I think we did the country a great service [buying HBOS] by not costing the taxpayer a bomb," says Daniels. The 20bn that taxpayers pumped into Lloyds for a 40pc stake is now breaking even, with Lloyds' shares ending the week at 73.75p compared with the 73.6p they originally cost.

The HBOS deal will always define Daniels' time at Lloyds (he joined in 2001, running the retail bank, and became chief executive in 2003). But it will also remain a hot political issue for some time as the Coalition's Independent Commission on Banking, chaired by Sir John Vickers, prepares its policy recommendations for the Chancellor, George Osborne, due next summer.

The Commission has been asked to formulate policy recommendations with a view to promoting competition in banking, among other things. It's possible that with numerous banks having been subsumed into their larger brethren in recent years, the mega-deal Daniels struck at the height of the credit crunch comes to be seen as a step too far, restricting competition, not encouraging it.

Daniels is clear he doesn't think this is going to happen. "The truth is we were given reassurances that we would not be broken up in future, that this would be cleared by the Secretary of State and that we would be permitted to hang on to HBOS in return for the short-term pain that we knew we were going to take."

It's certainly true that Lord Mandelson cleared the deal back in 2008 and competition waivers were granted at the time. But the Office of Fair Trading still has the power to revisit the transaction and the current Secretary of State for business, Vince Cable, is far from convinced that Lloyds enjoys any special privileges.

"I'm not aware of any such reassurance," says Cable. "If Lloyds has it in writing, I would like to see it. That would change the framework we're operating under. It's never been raised with me, either by Lloyds Bank or anyone. This needs clarifying.

"My position is that the Banking Commission will operate from a clean sheet of paper and produce a set of proposals to make a safer banking system and provide maximum competition. If Daniels says he has an agreement, he's got to produce some evidence."

Daniels knows all too well that apparent assurances given by officials at different times during the crisis have proved to be no more than financial ephemera. He recalls the infamous October weekend in 2008 when the Treasury and the Financial Services Authority (FSA) were demanding banks raise new capital. He said the FSA gave him the choice of raising cash through the equity markets (impossible, as they were closed to such business) or accept the Government's recapitalisation programme and allow the taxpayer to take a stake.

"At the time we understood that several banks would be in the government programme. We were given this assurance and given an assurance that the state aid requirements would not be onerous. This had been very clear. But it turned out not to be the case. There weren't several banks and state aid turned out to be more onerous."

Daniels assumed the markets would be told that most, if not all, banks had agreed to accept government money as part of a new prudent regime, thus avoiding the stigma of being singled out as a "bailed-out bank", which Lloyds has been saddled with since. Instead, it was Barclays (LSE: BARC.L - news) that most famously escaped taking public money with John Varley, its chief executive, stubbornly refusing to leave his Canary Wharf eyrie that weekend for talks with officials at the Treasury. In contrast, Daniels entered his counterpart's lair in Whitehall where a recapitalisation plan was hammered out.

Something similar happened the following March when the Government launched its Guaranteed Asset Protection Scheme (GAPS) to insure banks against losses, which Lloyds was "strong-armed" into, according to Daniels, "at a considerable cost of 2.5bn". Again, Barclays escaped the emergency scheme.

So was he misled by the Treasury and FSA? "I wouldn't say misled. We entered into it [the recapitalisation scheme] on the understanding that there would be multibanks involved. The same assertion was made at the time of GAPS. Things didn't turn out as they were presented."

The HBOS deal has long been shrouded in myth. Was it really agreed between Gordon Brown, desperate to keep the stricken bank out of state ownership, and the then Lloyds chairman Sir Victor Blank? Was it rushed through without proper due diligence?

"There wasn't pressure. There was a negotiated deal," says Daniels. "We wanted to buy HBOS and the full board was behind it. They [the Government] knew perfectly well that if HBOS fell into the arms of the taxpayer, the value destruction would have been enormous."

Daniels feels it's significant that neither Brown nor Sir Victor have tried to claim credit for the deal over the past 18 months. "I've always been steadfast and straightforward. I will take the brickbats as well. This was my deal. If shareholders want my head, I won't shy away from my responsibilities."

But was it a rush job that has since cost Lloyds' long- term shareholders a packet? Daniels says his team completed 5,000 man-days of due diligence, which was the maximum they were allowed to do as one public company acquiring another. Competition and client confidentiality rules would not allow any more.

But Daniels reveals his team actually had even more "advantaged" information within the law on which to base their decision. Andy Hornby, then HBOS chief executive, had already approached Lloyds and other banks asking to be lent money to keep HBOS going. This Lloyds did, but the cash was advanced only when secured against large parts of Hornby's own loan book.

"We knew the quality of their loan book because they were putting up so many of their loans as their collateral. The myth about the due diligence came from the subsequent Treasury Select Committee (TSC) hearing. Andrew Tyrie [now chairman of the TSC] asked me a hypothetical question about what would have happened if there were not restrictions? I said we would have done three to five times more. Of course we would, but that's like asking if beer was free would you drink more? Of course you would. I would because I like beer."

So what about the future? How long will it take long-term shareholders to see the benefit of the HBOS acquisition? Essentially, if in September 2008 you had chosen to buy 1,000 old Lloyds shares as the banking crisis escalated, they were at 280p a share. If you hung on and invested in the subsequent capital raisings (bar the first, which was above the market price and only taken up by the Government) you would have invested 3,882 at an average price of 99p a share, compared with about 74p now. But if you allow for the 17.7pc general fall in all banking stocks, the average price paid falls to 81.4p. So old Lloyds shareholders are still in the red but moving in the right direction.

Daniels clearly expects to be around to see most of his shareholders back in the black.

Returning the bank to profit has silenced those seeking his head. But the succession is a topic Daniels' own chairman, Sir Win Bischoff, knows he must get right. Daniels will be 59 this month but doesn't intend to retire at 60. "Despite having lived in the UK for more of my adult life than anywhere else, I'm still American. I have American roots. The 60 thing is more of a British thing than an American thing." But neither does he measure progress in terms of years, rather he looks at achievements.

By the annual results of February-March 2012 he will be able to declare the HBOS integration complete and a cash-rich Lloyds' return to paying dividends. An obvious time to take the applause and exit stage left. The succession gun will probably have been fired by Sir Win and the neatest governance trick would be to announce a name, if not before, then at the same time as Daniels' triumphant 2012 results. The leading internal candidate is Helen Weir, another retail bank head, followed by Mark Fisher who is masterminding the HBOS integration. Sir Win would probably see it as a serious failing to announce his own retirement as chairman in the autumn of 2012 without a successor sorted.

Daniels is now off on a family holiday to Panama, where his wife comes from, clearly relishing the next few years as he strives to leave his mark on British banking as the not-so-quiet American.

The Times -- 7 August 2010

Personal Investor: Robert Cole says hold Lloyds Banking Group as the results suggest genuine reasons for optimism, although there is a long way to go before shareholders can be confident about their investment.

Sunday Times

Lloyds Banking Group may be in a position to pay out 15bn or more in dividends in 2012 as a result of the recovery in fortunes for the banks who a year ago were reporting record losses. Lloyds is prevented by the EC from paying dividends at present as the price paid for approving state support after the HBOS takeover. But the bank's improved financial position could now see the Treasury sell its 41 per cent stake sooner than expected. Meanwhile, the bumper profits unveiled by all the leading banks last week has led to increased criticism about their alleged lack of lending to business.

DERAMPERS BEWARE!

From the FT.com .........

Online chatroom rumours under scrutiny
By Miles Johnson -- August 9 2010 03:02

Two UK-listed companies have launched investigations into rumours spread in online investment chatrooms, highlighting the influence of bulletin boards on the smaller end of the London stock market.

Online bulletin boards such as ADVFN and iii attract thousands of posts each day from a dedicated audience of retail investors fiercely debating their portfolios.

Nighthawk Energy, an Aim-quoted oil company, is considering launching legal action against anonymous bulletin board users whom the group claims have used multiple accounts to spread false rumours about its solvency and management team, people close to the company said.

The investigation would not target the bulletin board operators, which were assisting with the probe, and was likely to focus on the use of multiple accounts by one person who repeatedly posted claims.

Nostra Terra Oil and Gas, another Aim-quoted oil company, has also begun an investigation into bulletin board posts which made claims about its chief executive.

Under Financial Services Authority rules, the distribution of false rumour with the aim of driving a companys share price down constitutes market abuse.

The investigations come after rumours on bulletin boards have triggered flash crashes in the share prices of small-cap companies this year.

In June shares in Rockhopper, the Aim-quoted Falkland islands oil explorer popular with retail investors, fell by more than 50 per cent in an afternoon after rumours appeared on bulletin boards questioning the quality of its oil.

The company was forced to release a statement to the stock exchange saying that it knew of no reason for the fall. The shares subsequently recovered in value.

Operators of bulletin boards can use data protection laws to decline to disclose information about their users.

Londons hundreds of small natural resources companies are among the most popular shares with private investors due to rising commodity prices and the potential for quick returns.

Data from TD Waterhouse, the online stock broker, shows that Aim-quoted oil companies such as Gulf Keystone Petroleum and Petro Matad are consistently in the top 10 of shares bought and sold by its clients.

Big Upgrade by this Broker........

Lloyds Banking Group FTSE 100 Financial Buy 140 75.16 86.3% Societe Generale

140p SP target 86.3% upside.

did you hear that big bang? SP 75p - champagne corks popping!!!

Except your target price is 85p, not 75p. Suggest you re-cork & hope the fizz doesn't dissipate!

Midday Market REPORT

Royal Bank of Scotland led the banks lower, hit by a downgrade to neutral from outperform at Credit Suisse. RBS fell 1.43p at 48.92p.
Lloyds eased 0.67p at 74.31p, while Barclays bucked the trend, gaining a modest 0.9p at 335.9p.

Looks like tomorrow I'll be taking delivery of that Ferrari then hey SmartyArse, Do you actually ever make any money playing in this Casino ???? Thought not !

nordy - suggest you print off your posts and show them to your psychiatrist

smarty

I will second that

Can I be the psychiatrist?
I will refer " nordy" to the surgeon and suggest a borehole on the small brain, we may find OIL

85p Roflmfao wot a cock !

A very strong start 74.32p +2p, though the market is just down

Lloyds agrees to sell Crest Nicholson stake to Varde
LONDON - Thu Sep 9,

LONDON (Reuters) - Lloyds Banking Group (LLOY.L) has agreed to sell its stake in housebuilder Crest Nicholson to U.S. investment company Varde, continuing to shed non-core assets and refocus on its core lending activities.

A source with knowledge of the deal confirmed that Varde was buying Lloyds' stake in Crest Nicholson and that the British bank was planning to make a writeback on its previous valuation of the stake.

Lloyds, the country's biggest retail bank which was part-nationalised during the credit crisis, declined to comment on the value of the sale, but the Financial Times reported it was priced at 150 million pounds.

The Crest Nicholson disposal follows hot on the heels of Lloyds' sales in July of its private equity business to Coller Capital for 332 million pounds, and its Ecuadorian branch assets for $25 million.

Lloyds was saddled with billions of pounds of losses after it bought troubled rival HBOS at the height of the credit crisis of 2008 in an emergency deal brokered by the Labour government of the time.

Its problems led the state to take a 41 percent stake after spiralling bad loans forced the bank to accept a taxpayer-funded bailout, in return for which regulators have also demanded that it sell hundreds of branches.

Lloyds shares were up 1.7 percent at 73.50 pence at 8:21 a.m. British time, making the stock the one of the top gainers on the benchmark FTSE 100 index .FTSE. The FTSE was down 0.2 percent.

Schroder UK Alpha Plus Fund update -- By Richard Troue - Thu 09 September 2010

Never one to be afraid of going against the crowd, Richard Buxton, manager of the Schroder UK Alpha Plus Fund, is currently very positive on the UK consumer and banking sectors at a time when many are predicting doom and gloom.

In support of his view Richard Buxton cites an overwhelmingly positive first half results season and improvements in company finances as the benefits of restructuring in the wake of the recession begin to show through. This doesnt mean were set for a walk in the park. He suggests growth will be sluggish and UK public spending cuts, set to be announced later in the year, could be more severe than many expect. However, he believes this will create attractive stock picking opportunities.

In the banking sector he is particularly positive on Lloyds Banking Group, the portfolios largest holding at 4.8%, believing the company will see significant profits, and has huge earnings potential over the long term. In total just over 24% of the fund is invested in financial companies.

75.85p +1.20p

2nd day moving higher on a good way, on news and MACD moving bullish

Back the banks
Lloyds Banking Group led the Footsie rally last week after several analysts updated their outlook for the stock. Leigh Goodwin at Citi said: UK domestic banks still offer long-term value. We continue to rate Lloyds as a medium-risk buy, and we also upgrade RBS to a buy, principally on valuation grounds. Richard Buxton at Schroders is maintaining his equity positions and his biggest holding is in Lloyds, which he said still looks cheap. The stock is down 28% over 12 months, although it has rallied 36% over the past three months.

.the sunday times

There is chances that LLOY will buy back its own shares when UKFI decide to sell their stake to the market

A very strong start of the day as the FTSE open well up. is now on a position were is ready for a BREAKOUT @ 77.68p