Lloyds Bank in profit turnaround
Lloyds Bank is this week expected to announce profits of £800 million for the six months ended June 2010 against a loss of £4 billion during the corresponding period last year. The company, which is 41% owned by the UK government, would appear to have manufactured a magnificent turnaround in profitability but is this at the expense of the small business arena?
There's no doubt that the UK government is looking to pressurise the likes of Lloyds Bank into increasing the level of liquidity in the small business arena. However, it is this cautious approach to increased liquidity, the UK economy and profit margins which has allowed the company to stand on the verge of announcing this significant turnaround in profitability. Would it be correct for the UK government to pressurise the company into increasing its risk profile at a time when the UK economy is nowhere near out of the woods?
There is something of a conflict of interest regarding Lloyds Bank and Royal Bank of Scotland with the UK government having significant holdings in both. The authorities, the banks themselves and third party shareholders are growing impatient for the day when the large taxpayer holdings in these companies can be sold off and this potential conflict of interest taken out of the equation.
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