Could Lloyds Bank be broken up?
There is speculation in the marketplace that management at Lloyds Bank may well be considering a breakup of the group with the company's Scottish Widows subsidiary said to be top of the list. If valued on a similar rating to its peers Scottish Widows accounts for around 20% of Lloyds Bank's total market capitalisation yet only accounts for 8% of the group's earnings. There are also additional funding requirements to take into consideration, which are expected to come in to play in 2012.
While there has been no official comment from Lloyds Bank regarding a potential breakup of the group in the future there is speculation amongst analysts and researchers. It is very difficult to forecast a true value of Lloyds Bank, and its many subsidiaries, because of the significant mortgage debt write-offs which have occurred over the last two years. However, many people believe that write-offs have peaked and slowly but surely we should start to see the true value of Lloyds Bank emerge again.
Royal Bank of Scotland is another UK banking operation which is in many ways shrouded in mystery and intrigue as to the company's "real value". Hopefully, once the recession is over, we should start to see a clearer picture of the future makeup of the UK banking arena and the strength and value of companies such as Lloyds Bank and Royal Bank of Scotland.
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