In a recent announcement, the Lloyds banking group has warned that its Irish operations have suffered losses to the tune of £4 billion. Ireland has recently received a £72 billion bail-out package from different funding agencies.
The state-owned bank announced that due to ‘significant deterioration’ of the Irish economy, its operations in the country will have to write-off losses of £4 billion. The news coincided with the ratings agency Moody’s declaring that is downgrading Ireland’s credit worthiness by a whopping 5 notches on the fear that Dublin may not be able to honour its obligations.
Lloyd’s Bank – which received a government bail-out package, has already lost value worth £1 billion on fears of its banking operations in Ireland. The bank had taken a £1.6 billion hit less than two months ago and announced that its £26.7 billion advances in Ireland were ‘at similar levels to the first half of the year’.
However, the bank has now revised the loss to £4.3 billion for the entire year after Ireland was forced to seek emergency funds from the European Union and the International Monetary fund.
Warning that the Irish economy has been sliding after IMF inspectors came to the country for assessment, it said a shocking 52 percent of its borrowers are either in default or have fallen back on payments. The figure was 10 percent less six months ago.
The unprecedented cut in government spending along with the looming political crisis has shaken consumer confidence further. The bank said: ‘The group has seen a further significant deterioration in market conditions in the republic of Ireland’ about the recent situation.
The bank will require more time to scale down its Irish operations than it had anticipated, it noted in the statement.
The present crisis started when the bank had taken over Halifax of Scotland, which had advanced billion of pounds to the now notorious property developers of Ireland. A shocking 90 percent of those loans advanced are in default, the bank noted.