HBOS reveals an £8 billion pound write-down
Today is the day that Lloyds TSB is likely to secure the merger of HBOS with its existing operations as HBOS shareholders get a chance to vote on the move. However, HBOS has come out with a warning that bad debt provisions for the current year will top around £8 billion which is nearly half of the £15.5 billion of emergency capital raised earlier this year.
This has sent a stark reality check to many in the banking industry who thought the worst was over and the industry was starting to come back to life. It will also send tremors through the government as the prospect of the banks requiring further taxpayer funding grows ever stronger. The last week or so has seen rumours that the banks have asked for additional aid but this has been neither confirmed nor denied by those in authority.
If the government was to agree to a further round of taxpayer funded emergency payments there would need to be more watertight agreements in place to avoid the controversy of the last few weeks. The government would also be taking a risk by using more taxpayers money to bail out an industry which many believe is at the root of the current recession.
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