Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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assets sitting empty due to the fact that no mortgages are in the window and no government back loans for established business is more likely to lead to recession unlike any other we have witnessed....
This is a perfect storm...
The problem for lloy was created by our Gov 7 yrs back when they introduced 'help to buy ' , this distorted free market forces and inflated house prices . Now that there's going to be an asset price correction of ~20% , anyone who bought in last 3 yrs will either have no equity or be in negative equity in their home . Large proportion of mortgages financed by lloy . Lloy will then be required to enhance its CET parameters . No divs in '20 , no divs in '21 .
Had our Gov not distorted free market forces in the housing sector , out of populism , the pain to be endured would be of shorter duration . Lloy recovery is +2 yrs .
"the scheme is for new loans NOT existing loans....and lots a businesses had been a precarious position prior to COVID-19"
Well i would hope that the loans come with some asset backed guarantees. Banks are well used to businesses going bust and have procedures to deal with that. Business loans are far more stringent than mortgage loans and although losses might crystallise, they would likely take over the business, or the assets.
fleccy - "I disagree. With the Government support measures, the banks will be protected from loan defaults. The banks are safe in my opinion."
the scheme is for new loans NOT existing loans....and lots a businesses had been a precarious position prior to COVID-19
Skier1,
You really must be fun on a night out......not.
You remind me of my youngest brother. He’s been predicting financial Armageddon for 25 years now.
You seem excited by it all. I guess some people like revelling in misery. Very bizarre to me.
"You're living in a dreamworld. UK GDP is going to collapse -30% and drag down the housing and mortgage and small-medium business markets with it. "
Again i disagree, the Government measures will protect the majority of people/Business. People on the edge and zombie business will be the ones that suffer, but they would likely have gone bust anyway. The banks will oversee this, they should look at a businesses viability before committing to provide support.
You're living in a dreamworld. UK GDP is going to collapse -30% and drag down the housing and mortgage and small-medium business markets with it. Billions and billions of pounds of bad debts are going to pile up here very quickly. Every year, LLOY "investors" pile on here trying to give reasons for a recovery -- but, every year, the shareprice keeps on plunging. Down -55% in the past 3 months alone. The news ahead is bad. The outlook here is bleak.
"Looks like the Gov't is setting up the banks to take a big hit from their policy to assist businesses."
I disagree. With the Government support measures, the banks will be protected from loan defaults. The banks are safe in my opinion.
"The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.
There are 40 accredited lenders able to offer the scheme, including all the major banks.
Eligibility
You are eligible for the scheme if:
your business is UK based, with turnover of no more than £45 million per year
your business meets the other British Business Bank eligibility criteria"
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
..lots of businesses, start ups wont even qualify for loans.
Looks like the Gov't is setting up the banks to take a big hit from their policy to assist businesses. Many are going to fail anyway and won't be paying back money borrowed. I can see this costing the banks a small fortune....
Lol. It can't get any more "dramatic" than a -95% collapse in the shareprice ;-)
There are gonna be billions and billions of pounds of bad mortgage debts piling up here in the coming months, raging unemployment, GDP collapsing, dividends are years away, and then the Silicon Valley giants and nimbler fintech startups are going to pile in and make life even harder for old dinosaur banks like LLOY in 2021.
This will be shorted to cr*p for the next month.
Indeed. Also, many LLOY shareholders well recall 2008's crisis when their well-run bank was pressurised by a then-Labour government to absorb highly toxic HBOS. That did the wider nation a huge favour, but many LLOY shareholders never recovered the consequences since then.
Though that was before my involvement in markets, one quite appreciates why many LLOY holders are now feeling very disappointed & angry by this latest setback. Cancelling the interims: okay. But the final divi at a time when housing markets & much else will be in limbo for months & lending from banks minimal, is just another severe blow to many.
They said, UK banks are far better capitalised now than any time since before 2008. If that's true, why the divi cancellations.
Take care all.
The problem is, LLOY "investors" have been saying "stop panicking" every year for the past 22 years... while the shareprice has collapsed -95% !!!
Some try to justify it by saying "look at the dividend"... But a 5% dividend in no way compensates for the -55% collapse in shareprice in the past 3 months. And, now, the dividend is gone, won't be back for years.
With UK GDP collapsing -30%, and house prices set to collapse -50% (bad for mortgages), the only way from here for LLOY is down. Look for 5-10p as the next stop.
I think that the Banks are doing all that they can to support viable businesses - and that is the key - there will be no wish to throw money at businesses that were struggling pre Covid but the tabloids will not be reporting that story I bet you!
Don't PANIC. not sure what you are trying to say. I for one will be looking for more action from the banks to deal with this crises. positive moves at the right times for its customers.
Now might be a good time to put more action .
Whilst I certainly agree with the long term sentiment I fear that the timelines will be longer than we would like here. It is going to take at least 18 months post Covid for the businesses that survive to return anything like to the norm. I hope I am wrong!
ATB
Message to all investors who are now underwater, DON'T PANIC!
You haven't lost your money as it's still a paper loss only. Would you panic sell your house if it's value dropped by 25%? No you wouldn't so why fret over a 4 month blip in the stock market. Life will return to something like normal and shares will recover also - the world depends on it. The world cannot continue with battered markets indefinitely, that's why if you look at the stock market long term it's trend is always up. Look at the ftse100 chart over the last 40 years and you'll see little tiny blips for 1987, 2000, 2008, 2016 and eventually there'll be a tiny blip for 2020 in a year or 2 time.
Lloyds is a behemoth in the banking industry and a key part of the economy. They have a strong balance sheet following the years after the financial crisis and have just cancelled the divi to protect itself further. Shares are all about sentiment and right now sentiment is cr*p. It'll turn once Covid19 is put to bed.
So, pick yourselves up, dust yourselves down and sit tight and wait for the recovery in a few months time. It'll come and when it does it'll be the mother of all recoveries with double digit growth figures for the economies most affected.
Relax.