成人快手

....so who still really believes we're going to make a profit from this?

Anyone ever seen how a depression works?

Nobody wondering why so many companies are raising additional capital? - lots of talk of 'acquisitions' - but not much proof of it.

If you ran a business - would you tell the shareholders that you need to raise additional capital or you won't make it to Christmas? - or would you tell them something positive - like expansion - but in a contracting market?

Sense? - nonsense.
You cannot oversupply and not expect demand to fall - remember some shareholders will have shares in several companies and if they all start splitting shares it's going to be difficult to keep up.

If this pattern continues it will end the latest FTSE boom / bubble and begin the slow steady decline....


Still - I suspect someone will happily come on here and tell me that the laws of supply and demand have been replaced by the law of 'hope' where the crash resulting from a 10 year boom is over in less than 10 months.

.....oh and with the Royal mail about to go on strike will any shareholders receive their paperwork for the rights issue in time?

Life would be easier if Lloyds got rid of HBOS. Strategically HBOS should be retained as a state owned bank (merged with NR) and developed as a competitive exemplar in personal and SME banking practices which would do more to enforce standards than the FSA/BoE. Is there a deal here?

Who will buy the shares that Lloyds wants to offer?

Can the buyers be sure of what they are buying? They effectively are buying a company saddled with an unknown quantity of bad debt. It is taking the Treasury months to work out what the risks would be so as to price the insurance scheme, yet, if LLoyds go the share route, shareholders will be taking the place of the Treasury, by taking on that risk themselves.

Would it be right for pension funds and institutional investors to be investing in this type of share offering?

It seems to me that the banks got into a problem because they were buying high risk loans, where they did not fully appreciate the risks involved - will institutional investors follow their lead?

Thanks Robert as ever for clarification and getting to the nub of the issue. The mileage in saying the taxpayer will invest 拢6.5 billion is some good news stories for labour: this is a sign that the economy is improving and now HMG expects to make a profit on the bank holdings in future rather than paying large sums in future - it is a way out of a very large insurance policy for HMG. Still not easy to sell to a public still keen to bash the bankers.

鈥淲e as taxpayers were on the line to pay out tens of billions in insurance to this bank. Now we pay 拢6.5 billion to get out of that insurance policy and the bank will stand on its own. We still own 43% but expect to make a profit on our holdings within two years and to benefit from the profits as the UK economy starts to recover.鈥�

That is the problem with such infantile politics though: if you treat the public as fools then you have to continue doing so or show yourselves to have been rather economical with the truth. Had they only made it clear that they expected a lot of the toxic debt to not turn sour; and admitted to regulatory mistakes as well as banking errors; this 拢6.5 would be a no-brainer (as it is to any intelligent person who's been following this crisis with you for the last two years).

Thanks again Robert!

4. At 10:21am on 08 Oct 2009, egrid1 wrote:

Who will buy the shares that Lloyds wants to offer?

A. - The greedy.

So without taxpayer help, in some form or another, Lloyds will crash.

Since we know that the Government will not allow any bank to collapse we may as well accept that we are going to pay for it and it will become part of the " we are all in this together" national debt.

What would be the alternative? What would happen if they were to go to the wall? Is it so unthinkable?

Last year we were given the argument that banks are too important to crumble. They had to get back to business as usual as soon as. Is that the same logic now?

If anyone is doubting whether we should expoloit everything we can from our 43% shareholding of lloydsTSB for the benefit of the taxpayer and economy, just imagine how much power a bank would want if they owned 43% of a company.

Their is a fundemental problem in pretending that billions of pounds of government support, guarantees and dictating of necessary funding ratios etc are some kind of minor tweeks to a free market. The only way banks will act to be of benefit of the wider economy is to nationalise

Surprised they need more cash - surely government bail-outs and hoarded QE cash, plus rip-off interest charges and arrangement fees will see them through the crisis.

No, the Chancellor should not allow this. The banks have survived because of huge taxpayer injections of cash and quantitive easing, much of which is in their coffers.It would be better if the government had a 51% stake in LLoyds, retained what we might call the retail section in public ownership and cut the speculative side adrift.
Much pressure on the financial structure is yet to happen. We are moving from a credit crisis to a Government Debt Crisis. This is very much worse and can even progress to austerity at war-time levels. This will induce a further economic slowdown.
The banking sector remains potentially unstable. Insiders are starting to say that the Country is, in effect, bust. Government debt is spiralling out of control. Controlling it will cause huge cuts in both public and consumer spending. It is more than possible that, in the sorry tale of the bursting of the flawed era of growth which was actually a bubble, the worst is yet to come.

As the largest shareholder, I can't see why the government would be unhappy if Lloyds did something to benefit their shareholders. It is no longer taxpayers vs. shareholders, they are one and the same.

A very clear cleft stick Robert, and I'd be interested to discover what Darling and Osbourne would be pushing as government policy

I would also call into question your "dilution"

Surely if there is sufficient capital out there to float Lloyds then the government would be better placed in not taking up their rights (the liabilities would then fall on the promoters if not fully taken)

To get a profit back on the government "investment" the remaining shares have to be sold into a buoyant market, and Lloyds was well know for returning shareholder value by buying up shares.

I for one, think that getting Lloyds out of Treasury control should be a priority because they can then focus on the "rubbish" (RBS, NR, B&B) that is left

7. At 10:42am on 08 Oct 2009, anewworld wrote:

"What would be the alternative? What would happen if they were to go to the wall? Is it so unthinkable?"

This question keeps going round and round and round. Whilst there are no answers unless you actually try it - you can look at history to see what the possibilities are.

Generally financial collapses have been isolated to individual firms - Savings & loan, LTCM etc which whilst causing severe ripples and triggering recessions - there were always other banks ready to pick up the pieces.

However there has never been a situation where the banking sector was so entwined through diversification. The understanding of counterparty risk is minimal which means a collapse in one bank is likely to set a whole load off - the last time this was seen was 1929. The fact that loans are also insured against default adds to the complication and multiplies the dangers of triggering the dominoes.

It was evident in late 2008 / early 2009, we started with Northern Rock and the ripples collapsed HBOS, RBS and B&B relatively quickly - as well as a number of smaller financiers. The Government staunched that wound - and I suspect it's because they knew if they didn't the lot would have gone - even those not taking big risks. I mean if 4 banks out of 5 on your high street collapse are you going to leave your savings in the fifth? - hence the rules of collapse.

It's also unclear the Lloyds position before the HBOS merger - it's been blamed for much of the trouble but it's highly likely that Lloyds were already in trouble and accepting the merger with Government subsidy was the only way to survive.

Unfortunately only politicans and bankers know the truth and neither of them are the most reliable of sources.

There is a lot of optimism about recovery at the moment, but considering the amount of lending has barely moved since the record lows when we were bailing out banks - do you really think banks are going to make enough profit to buy out the tax payer in such a short space of time? Don't forget we oen nearly half of Lloyds and most businessmen out there wil know that they would struggle to raise the cash in 10 months to buy 43% of their business in boom times - let alone in times of negative growth.

There is some heroic and muddled thinking at Lloyds; not surprising for the bank that thought buying HBOS was a coup.

All this get out of APS is designed to get EU off its back -

They do have some very strange management there.

Talk about throwing good money after bad! Who in their right mind would agree to dilute their existing shareholding by buying yet more shares when the full extent of the losses held in the loan book have yet to be disclosed? You would have to be mad.
This whole share issue mania taking place at the moment reminds me of the final throes of a housing market that prior to a crash exhibits some sort of mini-surge, a kind of 'in denial moment' that hopes above hope that reality will not dawn. The problem is that it does and it will. Artificial interest rates and QE only serve to delay the inevitable, they don't stop it happening.
The sad truth is that the taxpayer already owns Lloyds Banking Group by virtue of its guarantee to keep the bank afloat. If the true losses on the loan book were disclosed, the taxpayer would have to step in and bridge the gap and in so doing take its stake beyond the magic 50%. The fact that the Board of Lloyds want to bridge this gap using individuals money vis-a-vis the creation of new shares rather than take the taxpayers shilling is that they want to leave breathing space to, yes you've guessed it, pay themselves some more nice juicy bonuses! If the taxpayer had the majority stake in the bank, they may find this a little difficult to achieve.
The banks may feel it fair to award large bonuses based on this years profits, but it could be argued that without artificial interest rates and QE there would have been little scope to make these profits in the first place. It could also be argued that without the bailouts the banks concerned would no longer exist. Which leads to the conclusion that until all taxpayer loans have been fully repaid, the banks should not be able to award any bonuses at all, end of. If the bankers concerned feel that they could do better elsewhere, then we in the real economy look forward to meeting them although I have to say that without Uncle Taxpayer around to hold their little hands they may find it a little tougher than they thought out here! Parasites.

As I鈥檝e commented before one of the banks RBS or HBOS should have been allowed to fail with only the retail/profitable bits rescued. As the banks (from a retail customers perspective) aren鈥檛 doing the same level of business as 2 years ago you have to ask why are they still so big? I know there have been some job losses in the industry but that is largely tinkering round the edges. Taking a whole bank out of the equation would have achieved the overcapacity restructuring a lot quicker.

Maybe its time for Lloyds group to downsize itself, as any other 鈥渘ormal鈥� business, would be forced to do. Perhaps ditching all the non retail bits of HBOS (which it should never have been made to take on) would reduce its need to raise more money.

Call me a cynic but I believe that the government is just trying to survive till the next election without any more disasters and will throw anything at the banks to make that happen.

Thank you to WRITINGS for your clear analysis.

Mmmmm. So a bit like unravelling last years Xmas Tree lights then.

It would be nice to think that behind the scenes the Government and the Banks know exactly what is going on.But it is very much to their advantage if the secrets are hidden.

My worry is that we are in a plummeting airline and the pilots are bickering about the number of seats we need.

This is not the story of the day. It is more threats by the postal workers to harm peoples business' unless their demands are met. A sad confirmation of our entitlement culture. All strikers should be sacked.

WE ALL KNOW WHAT THIS IS ABOUT!!! ENTRY INTO THE GAPS WOULD MEAN FORGOING THE OBSCENE MEGA BONUSES..... THESE INSTITUTIONS AREN'T PROPER BANKS - THEY'RE SIMPLY CASH MACHINES FOR THEIR EXECUTIVES.
IT'S INEVITABLE THAT ULTIMATELY RETAIL BANKING WILL HAVE TO BE NATIONALISED AND INVESTMENT BANKING CAST ADRIFT..... OVER THE LONGER TIMESPAN INVESTMENT BANKING HAS NEVER MADE A PROFIT. IT ASPIRES TO MAKE "PROFITS" FROM RIDING WAVES OF BUBBLES AND GRABBING MEGA BONUSES FOR ITS STAFF AND EXECUTIVES ON THE BACK OF THIS.
SOONER OR LATER THERE IS A MELTDOWN WHEN TOO MANY BUBBLES BURST AT ONCE AND HEY PRESTO! THE PROFIT'S GONE BUT THE BONUSES ARE GALLOPING OFF OVER THE HILL BY THEN!
IT'S AN UTTER SCAM AND NOTHING SHORT OF CORRUPTION - BUT WE CALL THEM MASTERS OF THE UNIVERSE! - ABOUT AS NONSENCSICAL AS BROWN BANNISHING BOOM AND BUST AND THEN SAVING THE WORLD WHEN IT BUST!Report Unsuitable

I am amazed that the Lloyds board feel that they can get away with this.... It just shows how they feel about their positions.



So when they are really in a mess they want the taxpayer to announce an asset protection scheme to keep them solvent. 6/9 months later when things look better they wish to backtrack on this and issue shares. Next we get to the best bit, they expect the taxpayer to buy 拢6.5 billion at the higher price that is around now!



So the poor taxpayer gets no money for helping the share price to rally and has to buy shares at the new higher price. Shameful



When it first was announced I thought they would raise funds to look to help trim the taxpayers liability not expand it. A rights issue backed by institutions may well be a good idea as it needs more capital.

This is a sorry mess caused by putting HBOS with Lloyds TSB in the first place and gives us a clue as to how humble bankers feel.

It鈥檚 starting to look more and more to me that a fairly serious depression is inevitable. No one at the 鈥榯op end鈥� seems to be keen on admitting this is a possibility, and many are even talking recovery and potential growth. But the fact remains we鈥檙e only essentially 11 months on from the biggest economic crash (/correction if you prefer) of probably all our lifetimes, and indeed possibly ever. And there鈥檚 no way anyone can truly believe that the effects of an economic event as huge as that can have disappeared entirely inside of a year.

We seem incapable of learning from our past mistakes, but if at least we were responding rationally to the current crisis then that wouldn鈥檛 be such a problem. We鈥檙e not however 鈥� not only are we ignoring the historical precedents of endeavouring to fix a burst bubble by re-inflating it, we鈥檙e also making a host of new mistakes. If we鈥檙e going to nationalise banks then we should do it fully, thereby ensuring that those in charge of our money are directly accountable. If we鈥檙e not going to nationalise banks, then we need to quickly outline a solid regulatory framework, potentially separate the more risky bits from the boring stuff, and then let banks get on with it (i.e. no more tax payer money, no more guaranteed bailouts etc).

Yet we do neither. We sit here with a hodge podge of nationalisation and regulation, sort of owning the banks and sort of letting them get on with it. In so doing we get the worst of both worlds 鈥� banks are not fully accountable and can (/will) happily get back to the bad business of the last few years; but banks are also not free to get on with things and because they feel like the party could end soon are busy boosting their profits and market share whilst they鈥檙e still sure they can (make hay and all that, even if it鈥檚 to the detriment of the customers).

Neither solution is perfect (for what it鈥檚 worth I鈥檓 in favour of full nationalisation of the tax payer funded banks and a breaking up of their operations to increase competition) but there is no perfect solution. One thing seems apparent to me though (and encouragingly to many people here); inaction and political manoeuvring is at best slowing down our recovery and at worst is actually sabotaging it.

If those at the top aren鈥檛 capable of fixing things therefore (or indeed are even intent on breaking things further for their own gain), then when do we say 鈥榚nough鈥�?

In other words, when is it time for the revolution?

'Which implies that Lloyds won't lend less to vital parts of the economy if it's a little less tied to the state'. Lloyds may lend more...........apparently they pulled out of the Seadragon job that went from Britain to Singapore because of it.

Pesto, I have been buying Lloyds hsaes for the last few months, this is not going to happen, Lloyds are just trying to negotiate down the APS by "scaring" HMG into thinking they have alternatives, the best case scenario is APS scaled back to about half.

#22 .....

Correct... Which goes to prove once again that Lloyds nor any other UK bank has the UK's real interests in mind. The Govt should nationalise it completely.

The tax payer has on the whole been taken to the cleaners with the banks.

With RBS and Lloyds the government should be doing all they can to maximise the future returns for the tax payer. With the on coming blitz on public sector cuts every PENNY will count.

Come on Darling stick the boot in and get some of our money back....

17. At 12:17pm on 08 Oct 2009, anewworld wrote:

"Mmmmm. So a bit like unravelling last years Xmas Tree lights then."

Lloyds is a tricky problem granted - but unravelling the Christmas tree lights is impossible!

.....and why are there always failed bulbs? They worked when I packed it away and no-one used it since.

Still - at least I won't have that problem this year as there will probably be no electricity and I'll have to go back to candles.

18. At 12:18pm on 08 Oct 2009, truths33k3r wrote:

"This is not the story of the day. It is more threats by the postal workers to harm peoples business' unless their demands are met. A sad confirmation of our entitlement culture. All strikers should be sacked."

True Victorian values there - and while we're at it lets get those children back up chimneys rather than in education - it's much more productive.

If you sacked all the strikers - then who would be delivering the mail - you? little green men? couriers at twice the price but only to lucrative destinations?

Thinking before you speak is such a rarity these days....

23. At 1:06pm on 08 Oct 2009, icantmakeupnames wrote:

"Pesto, I have been buying Lloyds hsaes for the last few months"


....never mind...

Guys, if the banks were allowed to fail the domino effect would not have only been the failure of virtually all the banks but the economy as a whole, litterally. i'm not one to usually quote Boris Johnson but i believe he was right to say "remember that this is one of the few global industries in which we truly excel; the City contributes about 9 per cent of Britain鈥檚 GDP 鈥� think of all the professions and trades that feast, directly or indirectly, on the nourishment provided: the lawyers, accountants, PR firms, architects, interior designers, builders, taxi drivers and just about everyone else".

He also went on, to his credit, to accept that there are "spivs and speculators out there" and that the problem was largely caused by the banks lying to each other over the contents to derivatives.

"The Bank of England's rate-setting committee keeps UK interest rates on hold at 0.5% for the seventh successive month."


nothing to see here.....move along now...

26, LOL

Getting your own back today :-)

A rights issue of 拢25bn vs 拢26bn share capital strikes me as LBG is notionally bankrupt.

I note with DISGUST that just annoucing such an action the share price of UK tax payer shares has gone down. LBG is NOT being run in the interests of the tax payer, it is time the management was sacked.

I see the Financial papers are saying LBG is mooting wether removing interest payments from bonds and so forcing a convertion into securities will "part pay" for the issue by changing the tier of the capital - hey presto !

Even if 拢25bn is raised and LBG gets out of APS there is no guarantee that LBG won't want to opt back into APS when trouble times come along. I personally cannot see how APS can even work without banks are committed, like any insurance scheme, to pay premiums regardless of their financial position. No insurance scheme can afford to insure the guaranteed offenders, it also has to contain the guaranteed safe bets. Otherwise it is a one way loss making enterprise.

Here in I would say there is a very good state case for ALL banks to fund APS, regardless of what position they are in - after all the self created risk assessment and insurance scheme created/traded by banks has been proved worthless.

This whole action seems a political issue, the question is how much political clout has LBG vs HMG - it won't change LBG as a liability to the tax payer, it just reduces LBG outlays to the Tax Payer.

If Lloyds goes ahead the UK tax payer will still have to pick up the peices regardless of the net result.

The net result is who is wearing the trousers ? Banks or HMG ? Isn't it strange that as neither is backing LBG that those who are - the tax payer - isn't even mentioned.

How the board of Lloyds has got the brass neck to come looking for more money is a mystery to me.Have any bright sparks done the calcs on the value destroyed for Lloyd TSB shareholders since they (the whole board) decided to embark on the HBOS fiasco?

Clear out the board is where I would start.

#29 "the City contributes about 9 per cent of Britain鈥檚 GDP" (I appreciate this is a quote from Boris rather than yourself)

Hmm. That's probably just an indication of the brokenness of GDP calculation.

Going back to basics, most of us who are in work create wealth - real goods and services. That's true for both those working in the private sector and those working in the public sector. And we get paid money for that work which entitles us to a share of the wealth that everyone else creates.

Ideally GDP should be a measure of real goods and services produced. That's too hard though, so we assume that the amount we get paid (either as companies or individuals) is a fair indicator of the value of the goods and services we produce. Trouble is, as we now realise, the system really doesn't work terribly well, and large parts of the economy are getting paid lots without generating any real goods and services in return (ie without being "socially useful"). There seems to have been a lot of statements this week as to how sections of the public sector fit into this category, but the City (and finance sector in general) is by far the biggest culprit here.

I suspect that we would be better off just ignoring the finance sector when calculating GDP. If you do that you find that the high levels of growth in the UK prior to 2008 didn't really exist. I suspect the modified figures might also show that we're just falling into a recession rather than climbing out of one.

I would add that this 'grand plan' is reliant on finding a buyer for SWIP who is prepared to pay 拢10 Bn for it.

Maybe, but considering Lloyds only paid 拢7bn for it in 1999 do you think it's likely?


Remember the environment we're in - if you were a buyer and you know the situation would you be prepared to pay that much for it?

I realise that there are possibly other investments to liquidate - but if they were of any significance then I would expect them to be mentioned.

Best of all the sale was done in a boom time (just before the Dot com bubble burst) - if you look at the FTSE 100 as a guide you'll see the position when SWIP was bought was just about where we were before the current crisis started.
FTSE&t=my&l=on&z=m&q=l&c=

Still - I suppose you can always hope that "there's one born every minute" - but most sensible acquistition hunters are going to be wary.

You're basically saying that the value of SWIP has increased since Lloyds bought it - even though the value of everything else has fallen.

They're either the best management team on the world or they are dreamers.
YOU DECIDE.

32. At 2:21pm on 08 Oct 2009, JackMaxDaniels wrote:

A rights issue of 拢25bn vs 拢26bn share capital strikes me as LBG is notionally bankrupt.

Ouch.

Stephany Flanders has at last highlighted the real under pinning problem of the UK economy - the PIPER still has NOT been PAID.

Regardless if Labour or the Conservatives gain power the "investments" by Labour or "Cuts" by Conservatives only relate to ONE FIFTH of the required 拢43bn a year - ie 拢7bn.

However the deficit is closer to 拢200bn a year - where does this illusory 拢43bn come from ???

In truth SAVAGE cuts and TAX increases are coming.

When I look at LBG raid on investors in this light I see it as nothing more than making hay while the sun shines.

LBG and all banks are going to be in terrible trouble as millions default of mortgages, as are all corporations in the near future going to face huge losses. Hence the stock market is VASTLY over inflated - which only goes to make clear NOW is the time for a rights issue.

God the poor mugs that invest in this sack of kack.

This comment was removed because the moderators found it broke the house rules. Explain.

Sadly, there are people around, like Boris Johnson, who truly believes that Britain excels at Banking.

Where has Boris been? The bailouts and the monumental losses are evidence that we are USELESS at banking!! Really, I just wish people would get this into their thick heads!
We would be better off in Britain today if our bankers hadn't been open for business at all in the decade prior to October 2008!

People like Boris Johnson LOVE to waffle on about how much tax revenue the industry raised in these "better" years. Hopefully Boris, having been listening to his mate George (Osborne) at the Tory party conference, FINALLY understands how all those taxes raised in the "better" times have gone up in smoke because they've all been used up, and then some, to bail out the stupid banks today!

If you were a pauper, won 拢10m on the lottery and set up a fairly risky business, but 7 or 8 years later found yourself 拢5m in debt and having to ask foreigners to lend you the 拢5m to keep you from bankruptcy and all because your own trading endeavours caused you to be in this position, why would you even begin to think you "excelled" in your particular field of business?!? You're well and truly bust!

But then your own Government bails you out and all you can do with this money is gamble (hopefully) a bit more cautiously than before and really just have to hope that the whole pack of cards doesn't come down in the meantime? You and your Government keep the illusion going. You both believe a world without insane modern banking isn't do-able?

The "authorities" are showing some quite unbelievably complacent leadership in the face of this. Still, comments by people who think we can let the banks off the hook, give these "authorities" comfort that their hood-winking messages are fooling sufficiently large numbers of people so they won't have to tell the real truth of the matter. Confidence really is as illusory as that!

Sadly, Lloyds had their arm or something else twisted to take over the moribund HBOS and thus save NuLabour from the SNP at forthcoming bye-elections. It never made any sense. The only single consideration driving Gordon Brown at the time was to save jobs North of the Border.

I don't see why so many people are so negative about the prospects for Lloyds.

At the moment, Lloyds has an agreement to join the GAPS but, as the economic outlook has improved, this has started to look very, very expensive.

Therefore the board of Lloyds is absolutely correct to do what is best for shareholders (of which the taxpayer is one) by trying to look for a cheaper way of getting to the extremely high tier 1 capital level that the FSA are demanding.

In fact, it is the duty of the board to do what is best for shareholders - if only they had remember this before buying HBOS!

The choice for the government is this: Do they want 43% of a clean bank at a further cost of 拢6.5bn or 43% of a hampered bank and an insurance premium of 拢15.7bn for approx 拢200bn of risk.

I suspect that the government won't want to put any extra money in and we will end up with a solution somewhere between the two options.

#18. truths33k3r wrote:

'All strikers should be sacked.'

That's one way of looking at it but if the management is so intransigent that the workers feel that they have no option other than to withdraw their labour surely that is a failure of the management and they should be the ones being sacked.

38. At 3:07pm on 08 Oct 2009, JackMaxDaniels wrote:

Excellent post.

When we're in the ballot box make sure you select one of the following options:

1 - Conservative - We're screwed and in depression
2 - Labour - We're screwed and in huge debt
3 - Liberal - We're screwed and dithering without any experience
4 - BNP - We're screwed and racist
5 - Green - We're screwed - but the planet might survive at least
6 - UKIP - We're screwed - but at least we're not going down with the Europeans
7 - Monster Raving Loony Party - We're screwed - but we'll have a laugh as the ship sinks.
8 - Other - We're screwed - and it really doesn't matter who we vote for.

Take your choice voters.....the economy is waiting.

Still - you could vote for the board at LBG seeing as we're majority shareholders - will that require a referendum?

Robert your term investment by the government is not the case. It has been called an investment but the reality is that it is by default not design so anything that dilutes the liability of a default has to be good news!
Shares offered at a deep discount will always attract, and the one thing you can bet is that Lloyds will not sell it's commercial property if the market picks up.
What I siuspect they will do like all other banks is pull the rug from under the developers and owners take title of the properties and then run with eth market peddling out buildings on the way.
With Rgeulators allowing Banks and Insurers to hold 'assets' on their books at the wrong market value to make them look solvent our financial system is far from improved.
The FTSA is now totally subject to futures and derivitive players and with cah paying nothing money is going into playing the market, not still where it was meant to go i.e industry.
Labour's approach is an absolute insult to everyhard working employee and and employer trying to keep their heads above water, and with unemployment clearly still on the rise when will it realise its handling of this unnecessary crisis has been dire.
The biggest worry is that they can't see why they are getting it so wrong and think the public is taken in by their spin and rhetoric.
Please be so kind as to tell them the public see's everything and knows more!

Hang on a minute, Lloyds has to repair their balance sheet to get out from under the GAPS, they need more assets with acceptable liquidity to do so.

The plan is raise 15bn through a share issue, the public stake is 43% so if the government took up the option it would pay lloyds 6.45bn in gilts (an acceptably liquid asset), the rest of the issue, 8.55bn, would be paid by other investors in cash.
The government can make Lloyds swap the cash for more gilts so the government will walk away with 8.55bn in cash to spend on an election and still own 43% of Lloyds.

Ali D is a genius.

40. At 3:20pm on 08 Oct 2009, spareusthelies

The day we start listening to the warblings of Boris Johnson is the day when I expect the return of the locusts, frogs, killing of the first born etc.

Let's not quote a man who has only fulfilled 1 policy promise in his first year (getting rid of the bendy buses) - which nobody was really bothered about and who has yet to reveal what this has cost Londoners - mainly because he 'aint to good with numbers' and who seems to be loosing a grip of the costs of the Olympics (oh didn't I mention we're committed to running some fancy show in the greatest downturn this country has probably seen?)

I suspect all Boris is doing is making sure he has a job at a hedge fund once he's hounded out of his mayoral position.

Good to know our politicians still have their own interests firmly at heart....

#28 - Don't worry about me old son, it is just very annoying when stories lie this are peddled by serious journalists as it feed the short sellers desire to drive down share prices. Rest assured, withintwo weeks, nothing will have changed, the SP will be back up at 105+ and then the whole sorry tale begins again. Luckily I rode the wave from the bottom on Lloy, RBS and Barclays but there are a lot of people out there who have lost a lot of money because of these kind of scares.

41. At 3:22pm on 08 Oct 2009, Anglophone wrote:

"Sadly, Lloyds had their arm or something else twisted to take over the moribund HBOS and thus save NuLabour from the SNP at forthcoming bye-elections. It never made any sense. The only single consideration driving Gordon Brown at the time was to save jobs North of the Border."


Ah - but I thought that "We're all in this together" - so surely Lloyds were merely doing their public duty in taking over HBOS.

This is where you're going to find out who we are that are in this together

42. At 3:27pm on 08 Oct 2009, Rowls76 wrote:

"I don't see why so many people are so negative about the prospects for Lloyds.

At the moment, Lloyds has an agreement to join the GAPS but, as the economic outlook has improved,"

...you've been reading too many papers - where is the evidence for the outlook improving?

Does the Bank of England usually print money in improving economic conditions?

43. At 3:33pm on 08 Oct 2009, BobRocket wrote:

#18. truths33k3r wrote:

'All strikers should be sacked.'

"That's one way of looking at it but if the management is so intransigent that the workers feel that they have no option other than to withdraw their labour surely that is a failure of the management and they should be the ones being sacked."

How about:

"They voted three to one in favour of action, with 61,623 out of a total of 80,830 workers who voted saying they wanted to strike."

So that's an extra 61,000 on the dole and over a third of mail staff gone.
Are the rest going to work twice as hard to make it up?
Don't forget union members are often the most experienced staff - you'll be left with a mail service full of students who are doing it part time between studies.

What a triumphant idea.

Maybe we will end up with a general strike like 1926 which I shall enjoy immensely as being picked up in the morning by Lord Posh wig driving the bus and having my mail delivered by Lady snot-rag will be a real novelty.

being a small business owner for the past 16 years and having seen and felt this recession/crunch etc like never before,having read this blog and seen some fantastic bloggers thoughts and questions and of course in these days of personal posturing and self righteousness some absolutely hilariously written but compelling doom mongering. l thought it would interesting to find someone who might just might be able to write something about UK PLC that perhaps looks at it not from a economists or business editors or political point of view l saw this article and was mightily surprised at who wrote it but nevertheless impressed and heartenened by its clarity about our plight what its got to do with Mr Peston's article l will let you all decide and deride no doubt

Is it April Fools Day?

oops the link to the article is

48. At 4:07pm on 08 Oct 2009, icantmakeupnames

Ah yes, but have you considered the following possibility in your assesment of risk?

If the story is nonsense and Lloyds do not go ahead with a rights issue that investors may see that as a sign they are going to be tied to the Government for a while.
As Government action is unpredictable (even more than market action) the current non-Govt investors might decide to ship out now.

Then it will be a race to see who is left in with the Government - which of course will have to nationalise or loose it's final holding.

So many of you concentrate on the share price and use it as an indication of the value - however I look at the market and where the revenue / profit will be coming from in the near future.

With consumers paying back debts at a record rate (and not spending as the Government wishes) - and mortgage approvals in a trough - where is that revenue coming from?

Just look at the graph - LOOK AT IT!



That graph also represents the income of the banking sector (or at least those issuing mortgages) as every other form of investment (Commercial, Asset rises, Industry etc.) are in a worse state.

The current level (well in September anyway) isn't even close to the lowest point since 93.

Can you explain that? Maybe I'm reading it upside down...after all I am not a banker and therefore not an expert (split my sides with uncontrollable laughter - get me a Doctor I'm bleeding all over the floor)

53. At 4:26pm on 08 Oct 2009, superseasideman wrote:

"Is it April Fools Day?"

It's going to be April fools day every day for the next 10 years - or until that 拢175 Billion is paid off by the taxpayer....

At 1:44pm on 08 Oct 2009, writingsonthewall wrote:

If you sacked all the strikers - then who would be delivering the mail - you? little green men? couriers at twice the price but only to lucrative destinations?


Why don't you go deliver it writingsonthewall instead of spending all day posting on here - clearly you have not enough to do!

Dilution ?

If company A valued at 拢25 billion acquires cash of 拢25 billion by doubling it's share issue,you'd think it would be worth 拢50 billion and it's share price double.

If this is not the case,say, the soi disant 'company A' is worth less,then you would hope it would be obvious to the management that this is not a good deal.

The banks are wriggling.
Trying to get something for nothing.
It is what they do.
They have always done so.
They always will.
And we let them. Always..

Meanwhile the real economy survives on scraps.

54. At 4:38pm on 08 Oct 2009, blogger1965

Interesting article.

I was particularly taken with this little gem:

"So why is Cameron getting away with it? Partly, of course, it is due to a media that has an allergy to arguments that take more than 30 seconds to explain and a bias to the Tories."

Now that's a fundamental problem - our media is pathetic when it comes to the complicated issues. If it can't fit it in a 5 word headline or on a caption across the bottom of the screen then it doesn't bother mentioning it. That is why - despite disagreeing with some - at least I know the people on this blog understand the issues.

However the rest of the population is not so knowledgeable on the subject. They do not have the connection between Government policy and the loss of their job and the consequences of low interest rates and QE. It's only when their tax bills start going through the roof will they realise what happened in 2008.

57. At 4:56pm on 08 Oct 2009, Yorkshirethai wrote:

"Why don't you go deliver it writingsonthewall instead of spending all day posting on here - clearly you have not enough to do!"

....you're the one reading it - haven't you got something better to do?

Have you considered posting on blogs might actually be my job?

The government does not need to take up it's rights it has the choice just like any other shareholder to sell it's rights, which means it will actually get some money back! This idea of dilution is also a nonsense, if it didn't end up taking up it's rights it may hold a smaller percentage stake but the share price and money generated from the sale of rights will determine the monetary value of it's own stake and whether or not it is currently in profit or loss for it's original investment. A robust significantly well capatilised bank will be very attractive to investors and it is very likely to put upward pressure on the share price to the benefit of both private investor and taxpayer interest. All the APS scheme is is a scam for the treasury to try and fill the massive fiscal black hole with a form of stealth tax. Really, the sensible comercial option is to actually raise the cash through a rights issue and disposals to provide the robust capital buffer all financial institutions need. The APS does not solve the problem of bad loans, these will still go bad regardless of this insurance. Going down the commercially sensible route by raising fresh capital will give a clear indication that the government does not want to be involved in the private banking sector longer than it has to. Given this Mr Darling will no doubt veto the capital raising which will tell us all what the real agenda of this government has been from the start.

How much has the APS actually paid out to date on bad loans?

Has anyone noticed that George Osbourne's catch-phraise "We're all in it together" has been lifted from THE ETON BOAT SONG, "We're all here together" !!!!!!!

What a dilema for Darling, does he shaft Lloyds further by insisting on adoption of the APS scheme, which increases the gov stake for no extra investment and if the losses from bad loans in the scheme are not significant enough to require gov payouts he gets 拢15.6Bn of Lloyds equity for nothing! Nice work if you can get it.
What the correct private solution should be, and what all other companies in need of liquidity are doing, would be to raise additional capital through a rights issue and disposals.
Why put the taxpayer on the hook for 拢260 Bn of potential losses if your desire is to extracate yourself from involvement in the private banking system asap? The only reason would be to take advantage of the opportunities being created by the credit crunch and make some much needed profit to plug the fiscal black hole.
What I would like to see is an analysis of why there is such a huge black hole in the government finances, to some degree the credit crunch is masking the real problems with the UK's macro-economic policy. Do the maths, the downturn does not account for such a huge budget deficit, this was going to be a huge problem even if the financial meltdown hadn't occured. Perhaps in some perverse way we should be gratefull to the credit crunch for exposing the weaknesses in the UK's macro economic policy and structural imbalances in time for us to do something about it before we actually did become a failed state, with Cristian fundamentalist terrorist organisations and central African countries holding charity concerts for us!

#47 Writings, Boris only thinks he has to deal with the "aspirational." I don't think it's dawned on him yet that he really is Mayor of London!

Regrettably, the Chancellor's view on the banking sector is too much of the aspirational sort as well. When this is patently NOT the time to be doing this. Instead this is the time to be cold and rational but preferably not with yet more taxpayer's cash!

It's hard to see Lloyds pursuing a rights issue with success, if it would seem to be to the disadvantage of the government to do this. What might Lloyds turn round to the Government and say, "chancellor we know how to run a bank better than you?" The Chancellor would surely reply, "no you don't, if you did, I wouldn't have to be here?!"

#55

Dear Mr Wall

I am not an expert either but I ask the following questions?

1)aren't HSBC, Barclays, RBS, Standard Chartered global businesses? so what proportion of their business and revenue is UK mortgages?
2)why would we want Northern Rock or B&B to arrange new mortgages? don't we want the mortgages paid off so we can extricate ourselves?
3)how many mortgage approvals have, historically been re-mortgages? so would it matter if these didn't happen except for the fees payable?
4)how many people have decided not to re-mortgage at this time?
5)how many mortgages are there in total?
6)how many mortgages averaging say 100,000 make up one loan of 350,000,000 to Liverpool Football Club or one purchase of ABN AMBRO of 10bn
7)How much debt is to businesses and how much is mortgages

If you look at RBS's latest financial statements you will see that income from UK mortgages in the first half of 2009 was 480,000,000 and in 2008 it was 219,000,000 - it doubled.

Just as well really because income from the UK corporate sector is down by about the same amount.

You can also see that UK mortgages are a smaller part of the business than UK corporate.

You can also see that UK retail and UK corporate parts of the business are a small proportion of the overall business with an interestingly named 'non-core' division accounting for an operating loss five times the size of the UK retail business' operating profit. This is, if I read the results correctly.

Yrs

Mrs Bloggs

Mrs B,

Never start your sentences with "I'm not an expert" because if you participate in the Economy (buy, sell, exhange, earn etc) then you are just as much an expert as any of the so called experts.
You're advantage is that you are not clouded by theoretical situations which never actually happen in real life - which actually makes you more of an expert than the Government.

1)aren't HSBC, Barclays, RBS, Standard Chartered global businesses? so what proportion of their business and revenue is UK mortgages?
Asset values are falling all around the world, it takes time for the ripples in the pond to reach the furthest places. The banking business is much smaller than it was so any profitable areas are swamped with competition and the others (like mortgage lending) are mothballed. Remember banks make money by lending money - and no-one is too keen to borrow at the moment as they fear what is round the corner (quite sensibly)

2)why would we want Northern Rock or B&B to arrange new mortgages? don't we want the mortgages paid off so we can extricate ourselves?
Well this is the real dilemna - I don't want UK households to borrow more (as you said - we're in deep already) - but as I said above - no lending, no profit for banks and further losses and job cuts.

3)how many mortgage approvals have, historically been re-mortgages? so would it matter if these didn't happen except for the fees payable?
I think mortgage approvals are based on new properties only - however if they are not then it simply makes the situation better than it is (as I suspect re-mortgaging happens regardless of the economic situation - sales don't)

4)how many people have decided not to re-mortgage at this time?
Probably not many - those who are throttling the banks (on good base rate trackers) will stay as they are and only people who's deal expires are going to remortgage - I mean nobody is going to beat the rate they were given 3 years ago - banks rates are very different to the BoE rate.

5)how many mortgages are there in total?
Not sure
6)how many mortgages averaging say 100,000 make up one loan of 350,000,000 to Liverpool Football Club or one purchase of ABN AMBRO of 10bn
3500 - is that a trick question? Whilst loans to football clubs seem huge they are often negotiated at lower rates because in the case of LFC the owners have put up assets as collateral. There are only 92 football league clubs and only the top ones borrow amounts like this - there are many more mortgage holders.
7)How much debt is to businesses and how much is mortgages
I don't have this information to hand - but you can find out. The banks have been 'told off' for not lending enough to businesses. This is for 2 reasons.
1) Businesses are reluctant to borrow and have shelved expansion plans
2) Banks know in recession business is a bigger risk than mortgage lending - they can't say this is why - but that's what they're thinking.

The danger is we hit a cycle of job losses and then cutbacks in spending causing more job losses....and so on.

The government needs those with money to spend and those with debts to save - the problem is those with money have money because they are not 'big spenders' and those with debts have them because they are.

To reverse these two philosophies is nigh on impossible - hence the likelyhood of a downward spiral.

Keep watching - there will be an alternative point of view along soon.....

#67

Dear Mr Wall

I think I made a mistake in the way I wrote to you.

I posed questions to which I either could make a reasonable guess or had rooted about in enough source data to know that UK mortgages are a very small part of the overall problem and that the RBS figures demonstrate this. Indeed, I'd say that most of this relates the the ease and cost of wholesale funding.

I wasn't interested in LFC in a sort of shock horror those terrible footbal types way. Merely that you only need to make 200 loans of this sort of size to get to 70 billion, one of the numbers that was bandied about as the 'extent of the problem' earlier in the year. Indeed you only need 7 deals of 10 billion (ABN purchase).

I looked at the companies that were failing earlier in the year. It was easy to establish which banks had lent these operations money.

I then did some back of match box calculations.

Say there are 10,000,000 mortgages (20 million homes - some social housing some owned outright) and the average mortgage is 100,000 (age of mortgage, LTV (RBS' average loan to value is about 65% according to theri figures) etc).

Say the default rate is about 2% - overall its less than that according to the data I have looked at.

That means that 20,000,000,000 on mortgages across the country is at risk right now. Well these are big numbers but the banks generally seem to work on about 1% from what I can make out

This means that currently, the difference in what they might have expected and now is 10 billion, total.

Even if my estimate of mortgages is on the low side perhaps it would be 15 billion.

If you then take a look at the 'corporate' businesses, you'll see the impairment rate is much higher. The numbers are bigger.

If you then take a look at RBS' non-core business and how much of that is being plonked into the asset protection scheme compared to UK motgages you'll find that the UK mortgage part is about 6%.

Actually, I'd say that the Lloyds data is moderately encouraging. They aren't at least lumbered with a huge overseas operation.

Anyway, I don't know whether it makes me an expert but I do know how to get at source data and when I do I find that nothing is what it seems.

I'm off for a nice cup of tea.

Yrs

Mrs Bloggs

It doesn't make sense for the Government to fear the dilution of its holding.

Thats irrational. It will still have a big holding, and the dilution will make all the company capital more valuable. Maintaining the Governmeent'ss percentage stake will do the opposite, it will dent the share premium.

Therefore, the Government will most likely not get its 6 billion back. Thats why it will allow a dilution.

I wonder if Lloyds intend selling off its Cheltenham & Gloucester assets to raise the capital needed. After all, why was there such a u-turn over closures of the C&G branches earlier this year?