The Lloyds Banking Group Announcement Could Affect The Homeowner Loan And Remortgage Market.

Aug. 6, 2009 - PRLog -- The £4 billion loss announced by Lloyds Banking Group could affect the way banks and building societies lend for the foreseeable future at least. Llyods Banking Group is formed by the merger of Llyods TSB and  HBOS.
80% of the losses announced were caused by the reckless lending of HBOS throughout their entire operation, including  the secured loans, mortgage and remortgage sector as well as to their commercial arm.
It is a frightening thought that almost 30% of all mortgage and remortgages in the UK are arranged through the group.
HBOS before the merger granted 8% of all commercial lending annually in the country., with the majority of the loans being granted to the property sector such as hotel groups, property developers and property investors. Many of the companies which were granted these loans were not thoroughly looked into before the loans were granted, and some of the individuals in charge of these companies were reportably pretty shady characters.
Some of these firms were never really viable, and that is why we are now seeing £19 billion pounds of loans in their commercial lending sector going bad and toxic.
Lloyds state that by the end of 2011 they will make an annual profit of £1.5 million, but this will be largely at the expense of many of their eployes who face redundancy.
Lloyds,having bought over the debt ridden HBOS,are now possibily being too cautious about lending to businesses , and this caution is adversely affecting the Brittish economy. Firms who require a commercial loan,and are more than viable to be able to repay the loan comfortably,are having to turn down orders as they do not have the sufficient cash flow to fulfil the orders without a loan.
Lending sensibily and borrowing prudently is at the very foundation of a healthy economy. So we have gone from one extreme to the other, that is from reckless lending to lending that is now too cautious. Banks and building societies throught Britain will have to now go down a sensible middle route when it comes to their lending policies.

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