New HBOS losses 'not a surprise'
16-02-2009
Massive losses revealed on Friday at the HBOS unit of Lloyds Banking Group plc were not a surprise to the Financial Services Authority, the regulator's chairman said on Sunday. Adair Turner said the numbers were in line with a worse-case "stress test" conducted by the FSA during the time of the British government's 37 billion pound bailout of the banking sector to see how much state support would be needed. He added that his regulatory review of the sector would be published on March 18, and would include "major changes" on capital requirements and liquidity along with proposals on pay and credit agencies. Part-nationalised Lloyds said on Friday its HBOS unit made a pretax loss of 8.5 billion pounds (US$12.3 billion) last year due to a bigger-than-expected rise in bad loans, wiping a third off its value and raising fears more state help would be needed.
