Lloyds is expected to remain loss-making this year and Barclays estimates it will have to mark down the value of its mortgage portfolio by a further £5bn over the next 12 months, while RBS faces a further £1bn of mortgage impairments.
Overall, Barclays expects Lloyds to face a total of £20bn in new credit impairments and RBS a further £13bn.
The new provisions would wipe out half of Lloyds core equity and about a third of that at RBS. However, retained earnings should mean the ultimate impact is far less.
“Despite the significant losses already taken and a tightening in lending standards, we see mounting pressure on UK credit quality for both bank,” said the Barclays analysts.
Lloyds is already 41pc owned by the state having received a government bail out in 2008, while RBS is 83pc controlled by the taxpayer as a result of its own £45bn bail out.
Any new losses raise the prospect of the need for new injections of capital into the struggling banks, though Barclays said it expects RBS to remain profitable despite the increased provisions.
Both banks are in the midst of radical restructuring programmes designed to make them safer and more profitable.
Lloyds is expected to cut about 40,000 staff as part of its cost cutting programme. RBS is in the process of preparing the shutdown of large parts of its investment banking division, which could lead to 10,000 jobs cuts.
Source: Lloyds, RBS face £33bn of new credit losses - Telegraph
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In the meantime sasguru's of this world are more concerned with fate of euro and interest rates Italy will pay in a short term on their bonds.
Overall, Barclays expects Lloyds to face a total of £20bn in new credit impairments and RBS a further £13bn.
The new provisions would wipe out half of Lloyds core equity and about a third of that at RBS. However, retained earnings should mean the ultimate impact is far less.
“Despite the significant losses already taken and a tightening in lending standards, we see mounting pressure on UK credit quality for both bank,” said the Barclays analysts.
Lloyds is already 41pc owned by the state having received a government bail out in 2008, while RBS is 83pc controlled by the taxpayer as a result of its own £45bn bail out.
Any new losses raise the prospect of the need for new injections of capital into the struggling banks, though Barclays said it expects RBS to remain profitable despite the increased provisions.
Both banks are in the midst of radical restructuring programmes designed to make them safer and more profitable.
Lloyds is expected to cut about 40,000 staff as part of its cost cutting programme. RBS is in the process of preparing the shutdown of large parts of its investment banking division, which could lead to 10,000 jobs cuts.
Source: Lloyds, RBS face £33bn of new credit losses - Telegraph
---
In the meantime sasguru's of this world are more concerned with fate of euro and interest rates Italy will pay in a short term on their bonds.
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