Member Info for Dorfan

Basically it sounds like HBOS was a long term disaster and although the courts said not it was of course in their interest to say so. How convenient to hold back on this information.

Lloyds interest long term was focused on the domestic side and this I guess is what they really signed up for happily not realising the corrupt side hidden in the wings.

Key undisclosed and toxic issues included:

High-risk, property-related corporate lending: HBOS's corporate loan book contained a high and fast-growing concentration of risky commercial property loans, which ultimately led to massive impairment losses.

Emergency liquidity assistance (ELA) from the Bank of

England: HBOS received a covert ELA loan totaling £25.65 billion. This was not disclosed to Lloyds shareholders, and a court later found that the non-disclosure did not cause loss because the Bank of England's intervention was intended to prevent an immediate collapse.

Secret loan facility from Lloyds: After announcing the intended acquisition, Lloyds provided a secret £10 billion loan facility to HBOS. The failure to disclose this was also a point of contention in a lawsuit brought by shareholders.

Over-reliance on wholesale funding: Both Halifax and Bank of Scotland, and by extension HBOS, were highly dependent on wholesale funding, which became a significant risk during the credit crisis when that market froze.

Inadequate risk controls and whistleblower warnings: Whistleblower Paul Moore, HBOS's former head of regulatory risk, was fired in 2004 after warning the board about the bank's flawed business model and weak risk controls.

The HBOS Reading fraud: A long-running fraud was uncovered in the HBOS Reading division, which involved corrupt bankers, consultants, and their clients. The fraud, which involved siphoning money from financially distressed businesses, was hidden from the bank's shareholders and later became the subject of lawsuits and regulatory scrutiny.

It is widely accepted that Lloyds would have been in significantly better shape for the future if it had not taken over HBOS in 2008. The acquisition was not a sound commercial decision but rather a government-brokered rescue to prevent a financial collapse, and it had severe negative consequences for Lloyds.

Lloyds without HBOS

Before the merger, Lloyds TSB was a relatively conservative and well-run bank, particularly when compared to its rivals during the financial crisis. While not without its own exposure to the credit crunch, it was a bank that was not considered to be at risk of outright failure.

If the merger had not occurred:

No immediate collapse: Lloyds itself was not in danger of collapsing. Its financial position was better than that of HBOS and Royal Bank of Scotland (RBS).

No toxic HBOS assets: Lloyds would have avoided inheriting HBOS's toxic loan book, which included massive exposures to high-risk areas like commercial real estate and risky corporate lending.

No government bailout (potentially): While the government bailed out the entire banking system, the primary reason Lloyds received state aid was because it was forced to absorb HBOS. If it had remained independent, it may have been able to avoid or require much less government intervention.

Better-off shareholders: Lloyds' shareholders were diluted significantly and saw their investment collapse after the acquisition. As an independent entity, their shares likely would have been worth far more in the long run.

Trouble

“ Decisions had to be taken quickly”

Why, it wasn’t in Lloyds interest to rush into it, only GB’s to stop Labour being saddled with a dead bank. If it could shift ownership quickly then it wasn’t going to be GB’s problem anymore.

Well it didn’t turn out well for everyone did it?

Here is a breakdown of why many believe the deal was a stitch-up:

Government pressure: As the financial crisis intensified, the UK government under Prime Minister Gordon Brown actively encouraged and brokered the merger. In September 2008, Lloyds TSB's chairman, Sir Victor Blank, and Brown were pictured in deep conversation, which critics saw as evidence of a "political stitch-up". Lloyds TSB was pressed to buy HBOS to prevent its collapse, with one former executive recalling being told by the authorities that it was "now or never to do the deal".

HBOS's undisclosed financial weakness: HBOS was on the brink of collapse due to its exposure to high-risk lending and toxic assets. A group of Lloyds shareholders sued, claiming the board failed to disclose critical information about HBOS's true financial condition, including covert emergency loans from the Bank of England and the U.S. Federal Reserve. While a high court dismissed the lawsuit in 2019, the judge acknowledged that material information could have been disclosed.

Worse-than-expected discovery: Following the takeover, HBOS's financial position was revealed to be significantly more distressed than anticipated. In 2008 alone, HBOS reported £10.8 billion in pre-tax losses, and the combined company was later saddled with a £17 billion bill for payment protection insurance (PPI) mis-selling.

Taxpayer bailout: The discovery of HBOS's liabilities left the newly formed Lloyds Banking Group in a precarious position, requiring a £20.3 billion government bailout to prevent its own collapse. The rescue resulted in the taxpayer acquiring a 43% stake in the bank.

Detrimental to Lloyds' shareholders: The deal proved disastrous for Lloyds' shareholders, wiping out billions in share value. Many investors lost a significant portion of their savings, and some referred to being "mugged" by the deal.

While some Lloyds executives insisted at the time that the merger was in the best interest of shareholders, the legacy of the acquisition has been overwhelmingly negative for Lloyds. Critics, including former Office of Fair Trading chief Sir John Vickers, argued that the government should have instead nationalized HBOS directly.

And that is the risks of playing the shares game. If you can’t afford to lose then you shouldn’t play.

And dependant on each persons views, Lloyds got stitched up back in 2008 (and who did that?) when perhaps HBOS should have folded and was bailed out by the government. If Lloyds resisted then it would be a different story.

Trouble

“ I would have lost all my hard earned savings if other Partys had had their way.”

And how would that have been?

Here is a more professional take on the subject. The current government is not a good fit with Lloyds regarding its health and wellbeing for the future.

Potential budget issues for Lloyds

Bank tax increases: The Labour government is widely expected to eye the banking sector's high profits as a source of extra tax revenue to plug the UK's fiscal deficit. Lloyds, as a heavily UK-focused bank, would be disproportionately affected by a hike to the bank surcharge, a tax on bank profits.

Potential tax options: Options floated include reversing the 2023 cut to the bank surcharge (from 8% to 3%) or adjusting how the Bank of England's reserve interest is taxed. The Trades Union Congress (TUC) has proposed various options, including significantly increasing the bank surcharge.

Impact on profits: While not considered an existential threat to Lloyds, a £3–£4 billion annual levy on the sector would still put pressure on the bank's profitability and potentially overshadow its share price.

Worsening economic conditions: A challenging economic backdrop could create issues for Lloyds, particularly through:

Higher impairments: A deteriorating economy and softer housing market would likely lead to an increase in loan defaults, requiring Lloyds to set aside more funds for impairments. The Office for Budget Responsibility (OBR) and others are forecasting weaker growth.

Lower growth and competition: Broader economic weakness could restrict Lloyds' growth in lending, and increased competition from challenger banks could squeeze margins.

Overall happiness is questionable

Based on publicly available information, it is not possible to characterize the overall workforce as "happy" in 2024 and 2025.

While some employees report positive experiences, the atmosphere of widespread job insecurity, performance pressure, and mixed management quality suggests a decline in overall employee morale and happiness.

The bank's focus on cost-cutting and a high-performance culture, including dismissing the lowest performers, is a high-risk strategy that could undermine long-term employee engagement.

Sounds good for me, it will surely increase the sp and the dividend

And if you have read this yourself you will know that they are not always right. It is based on current circumstances, who it is making these claims, guess work and a wet finger in the air and hope they get it right.

Anyone making investment choices based on these people need to realise they can lose money.

HD

“Lloyds are also investing into social housing. This means they make a profit from tax payer’s funded housing benefits.”

Sounds a good move to me. A good reliable revenue stream. If LBG didn’t do it someone else would have done.

STP

The kicker in that article is right at the end which says:

Yet political uncertainty (talk of a potential bank tax in the upcoming Autumn Budget) and economic risks temper the outlook

TFE

“Anyone who's been here for any length of time will spot the repetitive nature of the comments.

The number of actual knowledgeable posters on here is quite small.”

They are the typical crystal ball comments speculating the share price, divis, bonus divis, crashes etc etc.

All pointless posts unless there is something concrete to back it up,

I don’t count myself knowledgeable with a big K but knowledgeable with a little k that has been good to me for actually making a profit from these shares and being lucky with the dividends.

STP

“looks like we are to hit 90p in a matter of weeks.”

And what do you see are the drivers for this to happen? From what I have seen there are some negative reasons coming up which we are all aware of which might stop any further increases in its tracks.

Being selfish I don’t want the sp to go up as it means less buybacks in the future.

For me the sp going up is only fine if I needed to sell, the dividends are my real concern.

Chid

Yes, I did know but it I don’t want to be in cash too long and then lose out on the dividends. Timing of course is everything.

Chid

“ Whilst certain people don't like such talk, as it is likely too close to home, the facts remain that Lloyds is deeply effected more than any other bank to the UK's economy.

Where do you see growth coming from for Lloyds?”

Isn’t it Lloyds and NatWest that would be hit the hardest by any windfall tax as they are the only two banks reliant on the UK domestic market only? The others all have interests overseas with their funds so have limited assets in the UK which would be targeted.

I know it’s not growth but the share price will increase with further buybacks. If over the next 3-4 years the volume came down to 50B and Lloyds is valued at 50-60B you can see where the share price could be at around £1 to £1.20

Of course all of this is conjecture and the reality is we shall see in 2029.

Chid

“ So anyone wise would likely get out and come back after the dust has settled.”

An interesting point, we have most of our Lloyds shares in ISA’s and although it may be tempting to sell them on the belief that there might be a dip and then buy back again, it would take both of us years to get them all back into ISA’s again.

I would rather take the risk and stay as we are. Reasons being we are in it for the dividends now and as long as they are not compromised then the share price is a bit irrelevant. If the sp did dip history does indicate that they will bounce back, just takes a while to do so.

If anyone has a good reason to convince I am wrong then let’s see what the options are and why.

Well if we go through another financial crisis and shares slump as they did before then I am well placed to go on a buying spree here and elsewhere.

Having seen certain companies recover well I can make a more informed decision on what to buy.

Interesting to see how this will impact any potential windfall tax the government may have calculated in to its budget figures. Perhaps LBG is not the cash cow it was hoping for.

We are off again with Trouble AKA paddy with topics that are controversial and It's clear that this user is trying to bait people into an argument with the goal of getting others thrown off the forum.

Let’s not give them the satisfaction of a response. We shouldn't feed the trolls. If all those that spoke earlier today simply don’t reply to them anymore then they will find themselves isolated and just talking to them selves, that goes for ASI as well.