Lloyds: Back in the red?
It's the first results tomorrow for Lloyds new chief executive, Antonio Horta-Orsorio - and I wouldn't be at all surprised if, in the time-honoured fashion of new brooms, he announces substantial losses on ventures that had already gone a bit wrong for his predecessors.
In particular, I would expect him to announce further significant writedowns on £20bn odd of outstanding loans to the troubled Irish economy - after last year's impairment charge of £4.3bn on Irish lending.
Also, he may well make a provision of well over £1bn to cover potential payouts to thousands of purchasers of PPI loan insurance.
This would follow last month's comprehensive defeat in the courts of Britain's leading banks, which had challenged the decision of the regulator, the Financial Services Authority, that they should pay compensation for mis-selling of the credit insurance.
If Lloyds were to incur such a big loss on its past sales of PPI policies, that of course would be seen as a very good thing by those who believe that Lloyds mis-sold to them - because it would imply that Lloyds would be ceasing its legal battle (with the other banks) to avoid making comprehensive restitution.
Anyway, the Irish and PPI debits together could well run to many billions of pounds - which would be enough to put Lloyds into losses overall for the first three months of the year, and possibly for the first six months too.
That would be embarrassing for Lloyds, though not for Mr Horta-Orsorio, who can't be held responsible for decisions made before his time.
Remember that Lloyds made a big thing last year of being back in the black, following its humungous losses in 2008 and 2009 of £6.7bn and £6.3bn respectively.
Anyway, if I'm right, and if Lloyds takes a chunky hit from Ireland and PPI, it would represent a setback to the recovery of a bank 41% owned by taxpayers - but it wouldn't impair the health of the bank in a fundamental way.
That said, it would pose a very particular question for the non-executives of Lloyds - which is why they chose to award a £1.45m bonus to the bank's retiring chief executive, Eric Daniels, earlier this year.
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