More grim news
I'm in Birmingham for the HBOS shareholder meeting, which looks even more certain to back a takeover by Lloyds TSB as a result of alarming news out this morning.
To update markets on its latest trading position, the Edinburgh-based bank's bosses have said their assumptions about losses have become significantly worse in the past two months.
There's no surprise that the mortgage, car loan and credit card losses are bad and looking worse.
Secured lending, mainly in homes, was in £400m of trouble two months ago. That's now at £700m.
Unsecured loans faced £800m losses this year. They're now assuming that willl be £1bn.
The most concerning figure is for businesses that look as if they won't be able to pay back their HBOS loans. At the end of September, losses looked like £1.7bn. Two months later: £3.3bn.
That's not just a sign of risky lending by HBOS. It's a bellweather for the state of British business.
It's very grim, raw day in Birmingham.
UPDATE: 1155 BST
Halifax Bank of Scotland chiefs have apologised to shareholders for the crisis facing the company, as its owners vote today on the takeover by Lloyds TSB.
Lord Dennis Stevenson, the HBOS chairman, spoke of a financial tsunami and recessionary gale raging. He said the bank had taken a considerable battering and that he was neither happy nor proud to report on the falling share value.
Speaking as a Scot, he said the loss of Halifax Bank of Scotland independence was "rather painful", but that it had been up to Lloyds TSB bosses to name the new company Lloyds Banking Group.
Shareholders at the meeting in Birmingham attacked the board for "reckless" decisions, failing to understand what they were trading, for being "a disgrace" for losing billions in the bank's value, and they were challenged to pay back their salaries and bonuses.
Lord Stevenson said bonuses had not been like some other banks and that HBOS had not taken the same risks as others on the US property markets.
The meeting followed a report to the stock market showing HBOS is assuming much worse figures for its debt exposure, particularly in loans to businesses.
This nearly doubled to £3.3bn in only two months to the end of November - a sign of the severity of recession now spreading from banks to the wider economy.
Hullo, I'm Douglas Fraser, and I'm business and economy editor at ´óÏó´«Ã½ Scotland. Welcome to my blog, where you can read my take on money matters, viewed from a Scottish perspective.
Comment number 1.
At 12th Dec 2008, kaybraes wrote:The news is not just bad for HBOS, the whole country is now facing the sort of debt faced by HBOS. We now have a government in total denial, wandering through the Brussels catacombs pontificating about saving the world. In fact, all that is happening is that the debts are increasing , the currency is failing and I suspect we are about to surrender all fiscal power to the European Union. This government has lost control of the economy and is now taking desperate measures, not to rescue the economy but to hang on to power by all and any means. Unless they bite the bullet and stop borrowing money to throw at failing enterprises which will continue to fail anyway , then there is decreasing hope of any recovery. Government spending has to be reduced to reduce borrowing , if this is not done now, it will have to be done on a massive scale at a later date with even greater hardship for the taxpayer and for the vulnerable.
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Comment number 2.
At 12th Dec 2008, ScottRho wrote:Politicians of both major parties for over 40 years have set in place policies that have now resulted in this disaster - there has been opposition to the "European ideal" - now it seems the stage is set to "destroy" the United Kingdom of Great Britain and Northern Ireland - a once great nation. We need Statesmen - all we have is "politicians"
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