Lloyds Irish loss continues to grow

Part-nationalised bank Lloyds has
warned it will suffer further losses from its investments in Ireland.

The group has lent $41 billion to
Irish customers, and says it now expects over half of that amount will not be repaid.

That is a worsening of 10 per cent
since its last update in June – a sign of the degree that Ireland’s economic
problems have worsened.

Lloyds, which is 41 per cent owned
by the taxpayer, has been particularly badly hit by its loans to property developers.

The bank lent more than $8 billion
for such projects and has had to write off 90 per cent of that total.

Nearly half of its loans to
property investors also turned bad as the Irish property market crashed.

Shares in Lloyds fell sharply after
the bank’s update on its Irish portfolio, as did those of RBS, which is exposed
to Ireland via its Ulster Bank division.

Banking shares had already been hit
after investor service Moody’s downgraded its credit rating on Ireland.

In June 2010, Lloyds said it would
be carefully monitoring the economic position of Ireland, after it closed its
banking operation there and effectively pulled out of the country.

It said at the time: “Rapid
introduction of austerity programmes for public finances has worsened the
outlook for countries with high levels of debt and deficits, impacting Ireland
in particular of the economies where the Group has significant exposures.”

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