Tuesday, 30 April 2013

Lloyds turning the banking tanker

As many regular readers will know I have a fairly bi-polar view of the economy. On the one hand doomsayers predicting the end is nigh are ALWAYS wrong in the same way that those who keep buying gold even right past the high point are going to get burned. However, the idea that some kind of strong recovery from the Financial Crisis is not any more plausible either.

It takes 10 years to recover from such Financial Crashes and we are only 5/6 years in, so plenty of 0% growth success stories will run.

Having said that it is quite encouraging to see Lloyds Bank return to profit today, even better is the underlying reasons; primarily they are managing to wind down their bad debt book at a good pace which means they can find buyers at above pure firesale prices. Secondly their core commercial and retail business remains strong and finally their costs cutting is reducing costs much faster than any losses can be piled up.

On the downside of the cost cutting is lots and lots of lost jobs, tens of thousands; generally though you could hear a pin drop in sympathy with the loss of lots of Banking jobs. Lloyds was never a big casino bank though and was pretty spread out across the Country to these losses are a shame, if necessary. I note too far less outsourcing by this bank (and RBS) to India and the Far East now that they are state owned.

Given Barclays and now Lloyds are in much better shape it only really leaves RBS holding us up.

Recover in the banking sector is a key step, of course the recovery has come due to the fact they won't lend any more on anything like reasonable terms, but you can't build Rome in a day

16 comments:

Ryan said...

Stuff RBS. If the Scots vote for independence they can clear up the mess at their expense with all that lovely oil money they think they will be getting.

Anonymous said...

Can you imagine what it would be like in Germany with this sort of overhang

http://www.zerohedge.com/news/2013-04-29/728-trillion-presenting-bank-biggest-derivative-exposure-world-hint-not-jpmorgan

andrew said...

That a bank is not as willing to lend as it was in '06 should not be a criticism.

Fair to complain that they are not behaving consistently - but it is more that they should not have lent so much in '06

Blue Eyes said...

For us, zie depression is over?

Budgie said...

Andrew, Lloyds was screwed by Brown when he lent on Daniels to take over HBoS, otherwise Lloyds probably would have avoided the need for a taxpayer bung.

CityUnslicker said...

Budgfie yes, but really it was Gordon's best friend Victor Blank who did the damage, more than Daniels.

the perils of having lots of stupid mates in power; a trick Cameron is repeating.

agence referencement said...

Good!!!! it 's very interesting. Banking systems achieve in solving some problems.But recently it is facing big probems. It's surprising......!the latest decison i think would overcome such issues. Also it may apear other solutions in the nearest future!!!!

referencement maroc said...

ohhhh!!! it's surprising!!! how shal avoid banking from basical problems, and achieve in its developement???????????we as citizens have to change our belifs mainly bad ones so as to help the government in the process of promotion of the system of banking in the country!!!

surface news said...

Well looking at the banking sector as whole, It is an old industry which was not used to change. This crisis has been hard for every bank, some took the chances to change and adapt others caused more noise. On the other hand new regulations such as Basel III have not really made the survival (recovery) of banks easier. Lets hope new regulation will prevent systematic risk in the future.

assurance info said...

On the downside of the cost cutting is lots and lots of lost jobs, tens of thousands; generally though you could hear a pin drop in sympathy with the loss of lots of Banking jobs. Lloyds was never a big casino bank though and was pretty spread out across the Country to these losses are a shame, if necessary. I note too far less outsourcing by this bank (and RBS) to India and the Far East now that they are state owned.

Agence communication said...

"" As many regular readers will know I have a fairly bi-polar view of the economy. On the one hand doomsayers predicting the end is nigh are ALWAYS wrong in the same way that those who keep buying gold even right past the high point are going to get burned. However, the idea that some kind of strong recovery from the Financial Crisis is not any more plausible either.
""

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