28 Feb 2009

Lloyds says HBOS unit made 10.8 billion pound loss

7:23 am on 28 February 2009

Britain's partly-nationalised Lloyds Banking Group has announced its HBOS unit made a record pre-tax loss of 10.8 billion pounds in 2008, the worst result in the unit's history.

HBOS was hit by the global credit crunch, soaring bad debts, tumbling property prices and a recession in Britain. It had posted pre-tax profits of 5.5 billion pounds in 2007.

In another day of grim news for the banking sector, the banking group said its Lloyds TSB arm, which merged with HBOS earlier this year, saw net profits collapse by 75% to 819 million pounds in 2008 from 3.3 billion pounds in 2007.

Lloyds Banking Group forecast the entire group would make a loss this year and added that it was still locked in talks with the British government about joining its scheme to ring-fence toxic assets.

The group is 43% owned by the state after an extensive bailout.

The dire financial news cames a day after Royal Bank of Scotland unveiled a record British corporate loss of 24.1 billion pounds coupled with an announcement it will need a new state bailout worth up to 25.5 billion pounds in fresh funds.