More on HBOS

| 30 April 2008 08:14

The Lex column in Yesterday’s FT highlights what many market players are thinking about the company’s £4 billion ($8 billion) rights issue: the economic outlook in the UK is worse than feared.

“The main potential explanation for the apparent excess capital is that the board’s outlook for the real economy is worse than stated. Retail bankers’ ears are fairly close to the ground and should hear a train wreck from a distance. That HBOS’s adjusted 2008 price/earnings multiple is six times suggests that the market hears rumblings too.”

-FT lex, 4/29/2008

It should be obvious to anyone watching the UK housing market that it is headed in the same directionas the U.S. market. HBOS is the biggest UK mortgage lender. Therefore, more losses are certain to hit HBOS in the coming quarters. The management at HBOS recognized this and has acted sooner rather than later. The only question is will £4 billion be enough.

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

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