Bank Results Are Set to Show the Scars of Financial Crisis; Big Four to Reveal Figures

Western Mail (Cardiff, Wales), August 3, 2009 | Go to article overview

Bank Results Are Set to Show the Scars of Financial Crisis; Big Four to Reveal Figures


Byline: Russell Lynch

THE UK's four biggest banks are set to show the latest scars from the financial crisis and recession this week in results for the first six months of the year.

As unemployment rises and more homeowners and businesses succumb to the downturn, rising bad debts will be under scrutiny - as well as the politically-sensitive issue of lending levels by the banks.

Chancellor Alistair Darling called in senior executives from banks including HSBC, Barclays, Lloyds and Royal Bank of Scotland for "robust" discussions at the Treasury last week.

Lloyds has committed pounds 28bn in mortgages and business loans over the next two years, with RBS committing pounds 50bn as a condition of state support.

Nationalised Northern Rock, which releases its own figures tomorrow, has also committed pounds 14bn - and an angry and suspicious public may well want to know how much money has been lent so far.

Although results will be well below the peak of the boom in 2007, the figures should show HSBC and Barclays - who have both avoided state support - faring better than struggling RBS and Lloyds, owned 70% and 43% by the taxpayer respectively.

HSBC and Barclays - which report interim figures this morning - have both shored up their finances during the period without the need for emergency funding.

HSBC launched the biggest cash call on shareholders in UK history - pounds 12.5bn - to put itself on a firmer footing, while Barclays agreed the pounds 8.2bn sale of its Barclays Global Investors fund management division.

The bank, which turned to the Middle East for funding, has already posted a 15% rise in pre-tax profits to pounds 1.37bn for the first three months of the year, thanks to investment banking profits.

This came after its acquisition of the investment banking division of failed Lehman Brothers, now looking like one of the best bits of business of the crisis so far.

The surplus helped it offset a 79% rise in bad debt charges to pounds 2.3bn due to credit write-downs and the deteriorating economic climate - with profits down "significantly" at its UK retail banking business, which includes the Woolwich. …

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