Credit Writedowns » HBOS

Lloyds to raise 21 billion pounds in biggest rights issue ever

Edward Harrison — Tue, 03 Nov 2009 12:57:06 +0000

Lloyds are looking to avoid the embrace of government by going to existing shareholders to raise capital and sidestep the draconian break-up solution foisted upon RBS by Neelie Kroes. According to Bloomberg, this is the largest rights issue ever for a British company and equates to $34 billion. All of this must be excruciating for

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PM Brown rejects BoE Head King’s call for breaking up big banks

Edward Harrison — Wed, 21 Oct 2009 16:01:23 +0000

If our response focuses only on the symptoms rather than the underlying causes of the crisis, then we shall bequeath to future generations a serious risk of another crisis even worse than the one we have experienced. -Mervyn King, Governor of the Bank of England The Bank of England head has come out unequivocally against

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The RBS and HBOS sinkholes

Edward Harrison — Mon, 13 Jul 2009 14:42:45 +0000

This comes via the Telegraph: UK Financial Investments (UKFI) said in its annual report that its loss on the two stakes – 70pc of RBS and 43pc of Lloyds Banking Group – had reached £10.9bn at the end of June. The losses, which are not yet realised, have been wracked up since Gordon Brown was

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HBOS and RBS get a right bollocking

Edward Harrison — Tue, 10 Feb 2009 13:21:42 +0000

I watched the proceedings of the UK Treasury Committee with HBOS and RBS this morning on Bloomberg UK TV and it was a dismal sight. It had the feel of the Nuremburg trials, honestly. The clip below doesn't do justice to how tense the atmosphere was. I will say this: these men from HBOS and RBS ran very aggressive organizations, piling in to all manner of risk at the top of the market. While they dissemble and prevaricate, it is plainly obvious that they did not see the risks in their actions, nor did they want to

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The worst M&A deals of all-time

Edward Harrison — Wed, 21 Jan 2009 06:00:38 +0000

As the financial industry further unraveled yesterday, Mathieu Robbins of the Irish Indendent asked a worthwhile question: Was RBS the idiot company of all-time in buying ABN Amro at the top of the market? Robbins says no and offers up nine other equally monstrous deals that all went seriously pear-shaped to prove it

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Recapitalising Britain

Edward Harrison — Tue, 07 Oct 2008 19:32:00 +0000

Prime Minister Gordon Brown has finally pulled the trigger. In the most momentous move yet in the credit crisis, the UK government is effectively partially nationalising the UK banking system. For months, I have maintained that the financial system needed to be recapitalised in the UK and elsewhere. If any country is to work its

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Europe is in for a rude awakening

Edward Harrison — Sun, 05 Oct 2008 01:15:00 +0000

The Europeans have no idea what is about to hit them. Their banking system is collapsing and European politicians are fighting amongst themselves. At French President Nicolas Sarkozy’s crisis summit, the politicians were unable to craft a comprehensive or wide-reaching response to deal with the banking crisis. Meanwhile, the carnage in European banking is increasing.

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Lloyds gets HBOS for a song

Edward Harrison — Thu, 18 Sep 2008 01:49:00 +0000

Lloyds TSB has announced that it will buy rival HBOS for 232 pence a share. Back in May 2007, just over a year ago, HBOS shares were trading for almost £17 each. However, HBOS closed trading today at £1.47, sustaining a loss of over 90% in 16 months time. While HBOS is often touted as

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S&P cuts HBOS counterparty credit ratings

Edward Harrison — Tue, 16 Sep 2008 21:47:00 +0000

In yet another move by ratings agencies likely to roil markets, HBOS has been cut by S&P. Given the fact that HBOS is the biggest loser to date in the European banking sector in the wake of Lehman’s collapse. This cannot be seen as good news. Standard & Poor’s said Tuesday it is lowering its

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Lehman fallout: HBOS and RBS are getting slaughtered

Edward Harrison — Mon, 15 Sep 2008 11:45:00 +0000

Don’t think that it is just the U.S. that has to worry about systemic risk. The Europeans have their own problems and the weaker financial institutions are getting absolutely killed in European trading right now. RBS is down nearly 13%. But HBOS is the top loser in the UK, down almost 25%. Are we about

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Relative value in financial services

Edward Harrison — Mon, 18 Aug 2008 14:30:00 +0000

Not every financial services sector company is a basket case destined for bankruptcy. There are many well-run lower risk organizations in the bunch. Moreover, let’s not blame the banking model for individual companies’ woes. The Economist had a good article this weekend highlighting the fact that it is not the universal banking model which is

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Deutsche Bank and HBOS hit by writedowns

Edward Harrison — Thu, 31 Jul 2008 09:12:00 +0000

The major European banks have gotten into the swing of things with their own reporting season. Today, Deutsche Bank and HBOS reported earnings. Deutsche Bank recorded a pre-tax profit of 642 millioneuros after writedowns of $3.6 billion due to the credit crunch. This takes Deutsche’s total writedowns toover $10 billion since the credit crunch began.

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HBOS versus Freddie and Fannie

Edward Harrison — Thu, 24 Jul 2008 18:30:00 +0000

The U.S. House of Representatives has passed the housing bailout bill helping troubled mortgage borrowers, but also giving the U.S. Treasury Department a blank check to support Fannie Mae and Freddie Mac. The New York Times describes it this way: Representative Barney Frank, Democrat of Massachusetts and a primary author of the legislation, said troubled

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B&B gets its money, HBOS and Barclays don’t

Edward Harrison — Sat, 19 Jul 2008 00:36:00 +0000

Now that Friday has come to an end in the UK, we can give a post-mortem to the UK capital raising campaigns from Bradford & Bingley, HBOS and Barclays. Bradford & Bingley shareholders have approved the bank’s £400m rights issue at an extraordinary general meeting in Sheffield. The backing means the lender can now go

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Rumour: NAB wants to buy HBOS Australia

Edward Harrison — Thu, 26 Jun 2008 21:24:00 +0000

This is the latest M&A rumour making the rounds in financial circles. I caught this in Today’s Financial News. And that may be the moment when National Australia Bank (NAB:Australia) makes a formal offer for the Australian branch of HBOS. NAB, the country’s largest bank, has already begun discussing the feasibility of an offer with

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Mortgage meldown in Britain

Edward Harrison — Thu, 12 Jun 2008 04:00:00 +0000

The UK is in the throes of the worst of the mortgage meltdown. Financial shares are tumbling. Home builders face collapse. Many top names in British housing and banking have been caught out and are getting a deserved swift kick: Northern Rock, HSBC, HBOS, RBS, Barratts, Bradford & Bingley, Taylor Wimpey — the list is

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HBOS in trouble

Edward Harrison — Thu, 12 Jun 2008 02:30:00 +0000

In April, I wondered aloud where HBOS was in this crisis in a post called “Where’s HBOS?”. Now, we know they are not immune to the problems infecting global finance. The Guardian has reported on the difficulty HBOS is having raising money in the capital markets as its share price has fallen below the price

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Barclays taps Sovereign Wealth Funds

Edward Harrison — Sun, 08 Jun 2008 16:53:00 +0000

The Sunday Telegraph is reporting yet another major Western bank is going cap in hand to sovereign wealth funds in order to stave off the inevitable crisis. This time its Barclays, Britain's third largest bank. At a time when RBS is issuing a massive £12 billion of fresh capital by tapping its beleaguered shareholder base, Barclays must have decided it needed to go another route if it is to have success raising capital

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Debt financing gone

Edward Harrison — Sun, 25 May 2008 10:00:00 +0000

Another side effect of the credit crunch is the lack of availability of cheap debt financing for businesses. Companies have two alternatives: they can hold off on needed financing until the credit markets are more inviting or they can raise money through alternative means like convertible bonds and rights issues (equity offerings). According to The

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More on HBOS

Edward Harrison — Wed, 30 Apr 2008 13:14:00 +0000

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

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HBOS to raise new capital

Edward Harrison — Tue, 29 Apr 2008 12:41:00 +0000

As I predicted on Saturday, HBOS has got caught up in the global mortgage meltdown. Bloomberg reports: HBOS Plc, the U.K.’s biggest mortgage lender, will sell 4 billion pounds ($8 billion) of shares to bolster capital depleted by asset writedowns and a deteriorating housing market. As the UK housing market has only begun to turn

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Where’s HBOS? 26 Apr 2008

Where’s HBOS?

Edward Harrison — Sun, 27 Apr 2008 03:57:00 +0000

Looking through old e-mails, I read an article from the FT in 2006 that surfaced claiming that HBOS (Halifax Bank of Scotland)were poised and ready to go offer loans for 125% of value. That's right, HBOS thought it a good idea to cover 95% of the house price and loan another 30% over appraised value unsecured as a personal loan. Now that the UK has joined the housing bust, one must ask where are the massive writedowns that have to be sitting on HBOS' books? Why aren't they looking to do another rights issue like RBS? I fully expect some pretty horrific things coming from HBOS as the housing crisis heats up in Britain

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