Newspaper article The Evening Standard (London, England)

Lloyds Shares Down 49% and [Pounds Sterling] Takes a Pounding

Newspaper article The Evening Standard (London, England)

Lloyds Shares Down 49% and [Pounds Sterling] Takes a Pounding

Article excerpt


LLOYDS was the latest to be ravaged by the City's banking crisis today as its share price virtually halved in frenzied trading.

At the same time, sterling took another pounding on the foreign exchanges and senior City figures said Britain was in effect "bankrupt".

Shares in Lloyds were down 49 per cent to 33.8p by late morning after a 34 per cent tumble yesterday.

Analysts said that the taxpayer is likely to be forced to increase its stake in the high-street lending giant from the current 43 per cent because of the scale of its losses in the sub-prime mortgage and other "toxic" markets.

City experts said the holding would have to be increased to at least 50 per cent and said full-scale nationalisation would have to be considered. Lloyds has already received around [pounds sterling]17 billion in taxpayers' bail-out money.

Manus Costello, analyst at Merrill Lynch said: "We expect Lloyds Bank- ing to lose money in 2008, 2009 and 2010, largely as a result of bad-debt provisions." At its worst point, its two-day fall wiped more than [pounds sterling]5 billion from the value of the bank now known as Lloyds Banking Group after its takeover of HBOS although the shares later recovered some ground to stand at 45p, down 20p or 31 per cent.

Other banks also suffered: Barclays was down 21 per cent, or 18.5p at 69.5p and HSBC fell 3.5 per cent, or 17.5p to 483.5p. Royal Bank of Scotland, which lost two thirds of its value yesterday, saw its shares rally slightly.

Wholesale nationalisation of RBS was mooted as senior members of the Government pushed for 100 per cent ownership rather than the 70 per cent the taxpayer currently owns.

It was the second day of the new phase of the financial crisis, which has so far defied all attempts by the Government to contain it. The four major high street banks have lost more than [pounds sterling]200 billion in value since the first signs of the credit crunch 18 months ago. …

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