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Hbos It Appears Had Bad Loans Of £21Bn In A Year!

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http://www.bbc.co.uk/blogs/thereporters/robertpeston/2011/01/will_fsa_take_action_against_h.html

............

At HBOS, something different happened. It lent tens of billions of pounds to companies - especially those with property interests - which have proved unable to keep up the payments and honour their debts.

The big question prompted by the sheer scale of the losses disclosed by Lloyds (as HBOS's new owner) from the beginning of 2009 onwards is whether HBOS could and should have revealed more and at an earlier stage about the problems being experience by those to whom it had lent.

Apart from anything else, the UK commercial property market was already in a dire state many months before Lloyds agreed to buy HBOS in the autumn of 2008.

For the avoidance of doubt, it is too early to say whether the FSA will find that HBOS breached important rules on the disclosure to investors of material financial information.

But the conspicuous fact that the FSA has not yet given HBOS a clean bill of health is not trivial.

Update 16.30: Here is the crux of what the FSA is looking at.

In the accounting period from the beginning of July 2008 to the end of June 2009, impairment losses for HBOS (losses on loans it had made) were around £21bn.

So that's £21bn of loan losses in a single year, of which the vast bulk came from poor quality loans to property-related businesses.

How credible is it that £21bn of losses can crystallise as fast as that?

Does that show failure of the accounting rules - which is what Tim Bush, the former Hermes fund manager, argues.

Or should HBOS have told its shareholders before the end of 2008 that a good portion of its corporate loans were looking a bit sick.

This is what Lloyds said about £7bn of loan impairments that Lloyds disclosed in a trading update on February 13 2009:

"The impairments are, principally as a result of applying a more conservative provisioning methodology consistent with that used by Lloyds TSB, and reflecting the acceleration in the deterioration in the economy, some £1.6bn higher than our expectations when we issued our shareholder circular at the beginning of November last year."

Does that reference to a "more conservative provisioning methodology" imply that HBOS should have disclosed at least some of the loan losses rather earlier than it in fact did?

The FSA will adjudicate on all this.

I suppose if you've lent money out to anyone without proper quality checks you could easily find that you generate £21bn in bad loan losses.

The banks make huge profits on the back of these dodgy loans so it's quite probably they could lose money far faster if these loans turn bad.

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It's all very simple really. If you do proper quality checks then some people might fail and not be given a loan. This means loan targets are missed and bonuses are not paid. Much easier not to do the checks, grant the loan and collect the bonus. Bonuses can't be clawed back and in the worst case scenario the bank fails and need to be bailed out.

Clearly nothing has been done by the banks that is illegal, as people would have been prosecuted.

...if I were a Lloyds Bank shareholder before the takeover/merger....I would be suing....they seem very quiet.... :rolleyes:

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...if I were a Lloyds Bank shareholder before the takeover/merger....I would be suing....they seem very quiet.... :rolleyes:

Llyods bank shareholders were robbed blind by the UK government. Its a disgrace.

"Here, take this bank, cover the loses and when you have finished we will split the banks up as they are too big"

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http://www.bbc.co.uk/blogs/thereporters/robertpeston/2011/01/will_fsa_take_action_against_h.html

I suppose if you've lent money out to anyone without proper quality checks you could easily find that you generate £21bn in bad loan losses.

The banks make huge profits on the back of these dodgy loans so it's quite probably they could lose money far faster if these loans turn bad.

It's possible. But more likely they were rolling over losses from year to year. If that was the case they are in sh1t as disclosure says they should have announced them.

Potentially very very serious. What the FSA could do to them will be minimal compared to what shareholders would do if that was the case. Maybe a UK Enron on our hands.

It's so easy for banks to hide the truth from the regulators though.

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That 21 figure rings a bell.

In the HBOS/Lloyds new story from last week I'm sure someone said it looked like they had lost £21Bn in the last 10 months. Can anyone confirm who it was, remember the thread?

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It's so easy for banks to hide the truth from the regulators though.

....not really ...the problem here is the FSA can hardly be described as regulators ....just part of the champagne socialist crowd hired by Labour to keep quiet...... :rolleyes:

Edited by South Lorne

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Llyods bank shareholders were robbed blind by the UK government. Its a disgrace.

"Here, take this bank, cover the loses and when you have finished we will split the banks up as they are too big"

By their Board surely. No-one held a gun to their heads - or did they?

Surely the industries finest were as shrewd, honourable and upstanding as their exemplary salaries, and could not have been fooled or blackmailed.

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A revered financial institution made some ill considered investment decisions? Who'd have thunk it? :blink:

Can't remember the details but a TV program in 2003 effectively exposed inducement to commit fraud at estate agent, broker and bank/building society level. It was exactly this type of fraud and making up of incomes that caused these losses and the runaway bubble (aided by interest rate setting and govt housng policy).

It has broken the back of this country.

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Can't remember the details but a TV program in 2003 effectively exposed inducement to commit fraud at estate agent, broker and bank/building society level. It was exactly this type of fraud and making up of incomes that caused these losses and the runaway bubble (aided by interest rate setting and govt housng policy).

It has broken the back of this country.

The problem with liar loans was that people were always going to use the system to their advantage. The banks should have stopped it at source.

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But the conspicuous fact that the FSA has not yet given HBOS a clean bill of health is not trivial.

...

The FSA will adjudicate on all this.

What you are expected to take away from this: the FSA are on the ball. Our regulators our tough and earnestly look after our interests. Banks are in trouble.

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The problem with liar loans was that people were always going to use the system to their advantage. The banks should have stopped it at source.

The banks knew exactly what was going on - that si why they were willing to gve pevious point on these deals in commissions to the brokers - they daren't do some of thes deals directly - all hands off. There was a call to the bank - wabted some ridiculous loan - bank emloyee directed them away from the bank through the broker network (back into the bank). They all knew what was going on and were utterly complicit in it - even down to the ******ing bog cleaner.

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Yes, what on earth happened to Lloyds.

In 1999, their share price was near £10 and they ruled the roost. The during the following decade, they had to watch the rival banks grow, whilst their share price slipped to about £5 by 2008.

There were two reasons. Either their competitor banks were gearing up, running with far too little capital, or it seems, they were running fraudulent operations. Peston says as much without using the word.

With HBOS it appears that they not only ran the biggest book of liar loans on mortgages, but they werent too clever or honest on the commercial property either. The FSA were either asleep at the wheel, or possibly even bought by the crooks. One of those two explanations is true.

Lloyds would have realised what the other banks were up to. Famously it refused to take on Northern Rock before it had it's run, unless the Treasury put up something like £20 billion. The treasury refused, Lloyds walked away, and there was a run.

We know that Lloyds was aware of a £20billion loan to HBOS at the time of the takeover of HBOS. It must also have known that the bank was full of toxic sludge when it bought it. So the unanswered question remains, why did it buy it when it had negative value? A share can go to zero in value, but when you buy an entire company, you get the net debt too.

Well I dont know why they bought it. The capital lost by Lloyds shareholders went to that net debt black hole, and to HBOS shareholders and bondholders and depositors who would have been wiped out if the bank had been allowed to collapse as it should. The mystery remains, why did the board buy it, when they knew it was a bust bank?

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Can't remember the details but a TV program in 2003 effectively exposed inducement to commit fraud at estate agent, broker and bank/building society level. It was exactly this type of fraud and making up of incomes that caused these losses and the runaway bubble (aided by interest rate setting and govt housng policy).

It has broken the back of this country.

B):P:rolleyes::rolleyes:

Check out ALL the details in my signature below. Watch the video of that very show 1st broadcast in 2003. It was THE WRITING ON THE WALL...... :rolleyes:

"Sir" James Crosby - Head of HBOS - was in this up to his neck. It COMPLETELY STINKS. Gordon the Moron Brown gave him his knighthood for "services to finance"....... SAY NO MORE. ABSOLUTE SCANDAL of the first order.

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B):P:rolleyes::rolleyes:

Check out ALL the details in my signature below. Watch the video of that very show 1st broadcast in 2003. It was THE WRITING ON THE WALL...... :rolleyes:

"Sir" James Crosby - Head of HBOS - was in this up to his neck. It COMPLETELY STINKS. Gordon the Moron Brown gave him his knighthood for "services to finance"....... SAY NO MORE. ABSOLUTE SCANDAL of the first order.

Eric - forgot it was there.... I trust you have some copies of that!

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Well I dont know why they bought it. The capital lost by Lloyds shareholders went to that net debt black hole, and to HBOS shareholders and bondholders and depositors who would have been wiped out if the bank had been allowed to collapse as it should. The mystery remains, why did the board buy it, when they knew it was a bust bank?

Well I remember that they knew they bought a pile of dirt, but they saw it as an opportunity to get an anti-trust waiver. In normal times they would never have been allowed to merge, because of the size their combined market share. And maybe this will pay off in the future, when they are the dominating UK bank. Besides the bigger the bank the bigger the bonus :-)

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That 21 figure rings a bell.

In the HBOS/Lloyds new story from last week I'm sure someone said it looked like they had lost £21Bn in the last 10 months. Can anyone confirm who it was, remember the thread?

might have been me, and I think it was RBS...it was to do with the billions in Profit the government had shown last April, compaired the to billions in losses they faced today....the total was around 21bn.

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B):P:rolleyes::rolleyes:

Check out ALL the details in my signature below. Watch the video of that very show 1st broadcast in 2003. It was THE WRITING ON THE WALL...... :rolleyes:

"Sir" James Crosby - Head of HBOS - was in this up to his neck. It COMPLETELY STINKS. Gordon the Moron Brown gave him his knighthood for "services to finance"....... SAY NO MORE. ABSOLUTE SCANDAL of the first order.

With respect Eric - that was old news!!

Same thing happened in the 80's and a similar thing Bankers used Mortgage Brokers to do their dirty work and create a barrier/excuse when things went wrong

Military do the same, except they used to be called Mercenaries, which got some bad PR, so they changed it to ‘Security Consultants’ – sounds a lot nicer

I think Mortgage Brokers also got bad PR in the 80’s so many changed to ‘Financial Consultants’ – also sounds better, but in essence, its just the same Sh*t –different day <_<

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Well I remember that they knew they bought a pile of dirt, but they saw it as an opportunity to get an anti-trust waiver. In normal times they would never have been allowed to merge, because of the size their combined market share. And maybe this will pay off in the future, when they are the dominating UK bank. Besides the bigger the bank the bigger the bonus :-)

I am afraid I have to quibble with you.

Lloyds were the only buyer. They did not need to pay a price for the shares, they were worthless, if they had offered a penny a share it would have been an offer that the HBOS board couldnt refuse, and a breach of the fiduciary duty of the Lloyds board. Their correct strategy would have been to let HBOS go bust and cherry pick their best assets.

With a bust HBOS, Lloyds would have gained more market share by default, cirumventing competition regulation. Other banks too were strapped for capital, leaving Lloyds to cherry pick what lending business was around. They would have been in bank heaven if they had let HBOS die.

So if you can tell me why they offered HBOS shareholders a chunk of the Lloyds shareholders capital, I would interested to hear it.

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I am afraid I have to quibble with you.

Lloyds were the only buyer. They did not need to pay a price for the shares, they were worthless, if they had offered a penny a share it would have been an offer that the HBOS board couldnt refuse, and a breach of the fiduciary duty of the Lloyds board. Their correct strategy would have been to let HBOS go bust and cherry pick their best assets.

With a bust HBOS, Lloyds would have gained more market share by default, cirumventing competition regulation. Other banks too were strapped for capital, leaving Lloyds to cherry pick what lending business was around. They would have been in bank heaven if they had let HBOS die.

So if you can tell me why they offered HBOS shareholders a chunk of the Lloyds shareholders capital, I would interested to hear it.

for the same reason 100's of thousands of bankers fraudulent, counterfeit and perjured documents ( crimes) go unpunished in the US...the government fears a total melt down,

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I am afraid I have to quibble with you.

Lloyds were the only buyer. They did not need to pay a price for the shares, they were worthless, if they had offered a penny a share it would have been an offer that the HBOS board couldnt refuse, and a breach of the fiduciary duty of the Lloyds board. Their correct strategy would have been to let HBOS go bust and cherry pick their best assets.

With a bust HBOS, Lloyds would have gained more market share by default, cirumventing competition regulation. Other banks too were strapped for capital, leaving Lloyds to cherry pick what lending business was around. They would have been in bank heaven if they had let HBOS die.

So if you can tell me why they offered HBOS shareholders a chunk of the Lloyds shareholders capital, I would interested to hear it.

Of course, you are right, but that was the story back then. At the time I thought it was insane what they were doing.

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for the same reason 100's of thousands of bankers fraudulent, counterfeit and perjured documents ( crimes) go unpunished in the US...the government fears a total melt down,

Exactly. What they fail to see though is that if you dont punish the behaviour that has caused this mess, then it will get worse and worse. Instead of that they are rewarding criminal behaviour with taxpayer handouts.

Sure, we might get a crash if we went after the crooks that appear to now control the system. We could rebuild though, with greater confidence that those who seek to defraud will end up behind bars.

Instead we are taught by our masters to cheat, lie, defraud, and whinge loud enough to get a taxpayer handout. Wealth is only created through hard work, honesty and trust last time I looked.

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Of course, you are right, but that was the story back then. At the time I thought it was insane what they were doing.

Before a judge, the board of Lloyds might well plead insanity. I dont believe it for a moment though, I am sure that there is a reason that they PAID for a bust bank with money that didnt belong to them. One day we may find out, though at the moment the truth is hidden from us.

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B):P:rolleyes::rolleyes:

Check out ALL the details in my signature below. Watch the video of that very show 1st broadcast in 2003. It was THE WRITING ON THE WALL...... :rolleyes:

"Sir" James Crosby - Head of HBOS - was in this up to his neck. It COMPLETELY STINKS. Gordon the Moron Brown gave him his knighthood for "services to finance"....... SAY NO MORE. ABSOLUTE SCANDAL of the first order.

+1

And for those who like to cut to the chase...

Fraud is still classed as a crime nowadays, isn't it?

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Before a judge, the board of Lloyds might well plead insanity. I dont believe it for a moment though, I am sure that there is a reason that they PAID for a bust bank with money that didnt belong to them. One day we may find out, though at the moment the truth is hidden from us.

Cheap BoE loans?

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  • 277 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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